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The new trading week begins with a positive mood in the stock markets, which is due to the world Central Bank's statement, led by the Fed. It says that the regulators will continue to adhere to soft monetary policy rates for a significant period of time to support national economies.
Europe will open in a positive zone today despite last Friday's pullback. The focus of the market is on the companies' reports for the third quarter, which may support the overall positive mood. The continuation of the COVID-19 vaccination process in the population of economically developed countries also adds support.
The crude oil market continues to rally, which is caused, on the one hand, by high demand for energy products before winter, and on the other, by production disruptions due to hurricanes in the Gulf of Mexico and the shutdown of the Persian pipeline. In fact, we can say that the restoration of strong demand for crude oil and, together with it, for gas is the main reason for the growth of quotes.
As for the currency market, the ICE dollar index is growing amid the rising US Treasury yields. In particular, the yield on the benchmark of 10-year bonds surged from 1.309% to 1.464% last Friday and, although it is slightly adjusted down today, the mood of the government debt market is clear – the Fed's decision to reduce the volume of government bond repurchases exerts and will exert pressure on the prices of these assets and support their yields accordingly.
But, despite the increase in profitability, the US dollar is not yet receiving support. It is consolidating in sideways ranges against the main currencies. It is influenced by two important factors that do not allow it to fall or grow – the influence of two multi-directional forces – the growth of the yield of treasuries and the demand for risky assets, company shares.
What can be expected for today's trading?
We believe that the stock markets will resume their upward dynamics amid the continuing soft monetary policy rates of the world Central Banks. The oil price rally will continue, but the US dollar on the currency market is likely to trade in the range against the main currencies.
Forecast of the day:
The USD/CAD pair is likely to remain in the range of 1.2580-1.2725 after testing the target level of 1.2580.
The AUD/USD pair is consolidating in the range of 0.7225-0.7320 on the wave of the US dollar's positioning and China's negative economic news. We expect the pair to remain in this range today.
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