Equity market indices in the developed world continue their bullish run after Fed’s Powell managed to downplay the Fed’s hawkish message during yesterday’s testimony. Nasdaq 100 set a new high.
US equity market indices are back at their heights after the Fed’s Chair Jerome Powell managed to downplay the recent hawkishness. Markets rose this week in expectations of his testimony, and did so after Powell reassured conditions would remain accommodative as long as needed.
Nasdaq 100 reached a new high yesterday as investors kept bidding for companies in the tech sector. The other indices also performed well this week, triggering a bullish run in other stock markets too.
In Europe, the DAX index traded above 15,500, close to its record high, while the FTSE 100 in the United Kingdom already erased most of its drop last week. The Bank of England’s decision today is the main event for British pound traders and the FTSE 100 index.
The strong comeback in the stock markets triggered renewed pressure on the US dollar. The risk-on environment translates into a higher euro, Australian dollar, or British pound, but also into a lower US dollar.
The Bank of England’s decision is the highlight of the trading day. The market participants do not expect anything material from the Monetary Policy Committee, even though the vote on the Asset Purchase Facility may easily create volatility on the British pound pairs just as the dot plot did for the US dollar during the FOMC Statement release last week.
Markets in Focus
FTSE100, GBP/USD, EUR/GBP, – markets in focus today.
FTSE 100 evolves in a rising wedge pattern since the year started. Despite most of the times the pattern signals a reversal, sometimes a running triangle looks like a wedge, but it is a bullish formation. For this reason, traders may want to wait for the index to close either above 7,200 or below 6,800 before going long, respectively short.
The GBP/USD pair formed a possible double top at the 1.42 level, and now the focus shifts to the pattern’s neckline at 1.37. A daily close below will trigger more weakness because of the measured move that points to 1.32.
EUR/GBP evolves in a very tight range lately. The cross keeps forming lower lows and lower highs, typical in a bearish trend, but it lacks conviction to break in either direction. Bulls may want to wait for a break above 0.8650 before going long, as such a break means that the lower highs series ended. On the other hand, bears may want to remain on the short side as long as the market keeps forming new lower lows.
Winners and Losers
Nasdaq 100 and the US stock market indices look strong, while the US dollar weakness returned.