The second trading week in March is full of positive sentiment. Stock
markets are on all-time highs as S&P broad market index soared above 3950
points, Brent crude prices went up to $69 a barrel, and U.S. Dollar is
gradually loosing strength to other G7 currencies.
Investors are full of optimism after U.S. congress has finally approved
$1.9 trillion relief bill that according to U.S. Treasury Secretary Janet
Yellen is “the most important thing is to get our economy back on track”.
Maybe it is so. Although some doubts could be expressed considering huge
misbalances in the stock and commodities markets. But investors are desperately
waiting for the fresh tens of billions (up to $150 billion) dollars that
Americans would bring to the market after receiving direct payments of $1,400
per person. This money may allow some large market players to jettison some
overvalued shares that may suffer sharp correction in case of another
Treasuries’ yields rally.
Joe Biden may sign the relief bill today, so that every American will
receive $1,400 cheques by the end of March. Thus, markets may witness the
increasing volatility next week with making investors nervous. The Federal
Reserve may support such scenario if the monetary policymaker would express its
little concern over rising inflation that topped 1.7% year on year, and poker
face rising Treasuries’ yields. Even the European Central Bank waved its
concern over government bonds sell-off by increasing the pace of the bond
purchases within the PEPP program.
Until the Americans waiting for their coronavirus relief money market
may continue their optimistic rally roughly by the mid of next week. The
S&P broad market index has passed over weekly support level at 3850 points
and may now move towards next resistance levels at 3990 and 4020 points. Would
it succeed to meet these targets is hard to say at the moment. There is no
intention to buy the index at such high prices. So it is better to make a pause
until the next week when there is more light in future market direction.
Oil
market experiencing technical correction after falling to $67 per barrel of
Brent crude. No prices are moving towards the resistance at $69.7 per barrel.
Crude reserves data turned negative this week as reserves in the United States
surged by 13.8 million barrels just in one week beating modest upward
expectations of 800,000 barrels. But a strong support for Brent crude at $67
per barrel and relief bill expectations hindered any further decline in prices.
Next
resistance levels for Brent crude are at $70.60 and $71.3 per barrel. Again any
purchases at such high prices are not desirable and better to be avoided until
the next week.
Gold prices
managed to recover to $1730 per toz amid declining Treasuries’ yields from
1.61% to 1.48%. However, gold may perform another effort to dive to $1700 per
ounce. Any long-term targets would be clear after FOMC meeting next week.
The
Greenback is losing its positions on the FX markets waiting for the Fed to
direct it next week. However, volatility is expected to be limited before the
meeting.
The
EURUSD this week is trying to return to the resistance level at 1.20400. So far
looks like a poor effort and it would hardly be better today. A consolidation
at 1.19500 is more likely.
GBPUSD
is starting its run from the support at 1.39200 with a target at 1.40400.
However, the pair has little steam to hit this target this week, and will likely
end it close to 1.39200.
The
USDJPY is sending mixed signals. On one hand the nearest resistance level is at
110.50, on the other hand, technical picture suggest a reversal pattern at
108.5-109.00. May be it is better to take a breather here too until the next
week when Fed’s Chair Jerome Powell reiterates his view on the market outlook.