A Promising Start to the Week
The week has had a decent start, with Europe a couple of percent, and Wall Street is eyeing a similar opening, as of this moment, the quantitative easing measures, will provide cause for optimism.
In these uncertain times, I’m sure the optimism will be replaced by fear, which, in turn, will be replaced by the promise, and maybe even a little bit, or exuberance, several times, over the next few months, only for the cycle to start again. In the end, it all depends on the second wave, and when it rears its ugly head, and how bad it is. Not to mention how far in the testing, vaccination, and healing has come along in the meantime. But this morning, we are optimistic, so that’s nice.
In times like this, you may wonder what is the impact of the population of the mood on the markets. We all want to be safe, but the ability to leave your house, maybe go to work, see friends and family (while respecting the most recent guidelines, of course) and just take a coffee, it will naturally put people in a better mood, after two months of locking. The fact that the sun does not hurt either.
Of course, there are much more fundamental advantages of all this. Like businesses, jonti, and more people to return to work, which means more companies can survive, and the people of jobs saved. We are in the midst of a severe recession, there is little we can do about it, but the more life returns to normal, the less severe it will be. From a market point of view, it is the second most important thing behind, avoiding a second wave that delivers a month.
No repeat of last month, it seems, for the month of June WTI contract
If it’s going to be a repeat of last month’s antics in the oil market, it will come as an even greater shock this time. We are past 180, and rather than plunging to new depths, and the rally is only growing, with the June contract are up nearly 10%, and above $ 32 a barrel.
The supply cuts of the last months combined with the progressive reopening of various countries around the world, has put a significant dent in the supply and demand imbalance, and alleviated the capacity problems that led last month to the panic.
The golden and springs back to life, with over 1 750 $
Gold has seen the light of day in the life in recent sessions, and the tasks of the previous highs with relative ease. Now, from above $1760, it looks very bullish indeed. There seems to be broad agreement that the fundamental factors are supportive of gold prices, with the dollar as the only major headwind.
But it is inflation that we will all appear destined to be talking about it for the moment. It is logical, without previous stimulation, the increase in the costs of doing business, and the deglobalisation we are all to inflation, at least in theory. An inflaiton hedge is one of the main arguments in favour of gold, and he will probably be a major talking point in the months to come.
A lot of pressure on $10,000
Bitcoin has survived another race to 10 000 $in the last week and has already been on the defensive once again today. This is another key battleground, and one that looks for the moment in favour of the bulls. This momentum could wane, with a break of$ 9,000, but at the time of writing, it is looking less and less likely.
The Economic Calendar
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Based in London, England, Craig Erlam joined OANDA in 2015, as a Market Analyst. With over five years of experience as a financial market analyst and trader, he focuses on the fundamental and technical analysis when conducting macroeconomic commentary. It has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks, including Sky News, Bloomberg, CNBC and the BBC. He holds a full membership in the Society of Technical Analysts and he is recognized as a Certified Financial Technician from the International Federation of Technical Analysts.