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Original title: Decision Analysis: The reason behind the find! The US dollar has risen strongly and gold is under pressure to make it to 1820. Biden’s stimulus plan is “difficult”
FX168 Financial News (Hong Kong) News Thursday (Feb 4) Asian trading hours, China’s liquidity tightening temporarily restricted buying, most Asian equities are under pressure and on the downside, the US dollar remains strong momentum and gold continues to fall towards the 1820 mark.
At the close, Australia’s ASX200 index closed down 0.87%; the Nikkei 225 index closed down 1.06%; South Korea’s KOSPI index closed down 1.34%. Stocks fell across the board.
Asian stocks were dragged down by liquidity shortages in China. Prior to this, China’s short-term interest rates rose again, reversing the fall of the previous two days.
“In Asia, risk assets have always been sensitive to China’s liquidity situation. The Chinese authorities have tightened their liquidity position in recent weeks,” said Masahiko Loo, portfolio manager at AllianceBernstein.
Rising interest rates raises concerns that Chinese policy makers may begin to take a tighter stance to control share prices and the housing market.
However, improved business performance, the vision of a large-scale stimulus policy in the United States, and a decline in enthusiasm for retail purchases have supported the risk-taking attitude.
In anticipation of the launch of a large-scale stimulus package in the United States that supports risk assets, the United States House of Representatives passed the new $ 1.9 trillion crown pneumonia relief bill. with 218 votes to 212 on February 3. Senate Majority Leader Charles Schumer called on fellow Republicans to join the implementation plan.
According to the “Capitol Hill” report of February 3, 2021, the bill was passed without the support of Republicans. Additionally, the Senate must pass a budget resolution, and then the Senate and House of Representatives must pass a budget adjustment package that includes the COVID-19 relief bill.
The report noted that so far, Republicans have doubted the plan, believing the plan is too costly compared to other aid measures passed by Congress, and the goal is unclear, especially when Congress passed $ 900 billion in December 2020. The rescue measures were only a few weeks later.
CNBC said that according to normal procedures, Senate Democrats must get 10 votes from Republicans to pass a bill. This task seems difficult, because some Republican senators who met with the president opposed his proposal with a $ 618 billion plan. Despite the gap, Biden said, “I think we will have the support of some Republicans.”
“In any case, the US stimulus package after the first quarter will further promote economic growth and boost global risk appetite,” said John Vail, global chief strategist at Nikko Asset Management.
In the currency market, the US bond market responded strongly to the possibility of an expansion in borrowing. Yields on US Treasuries have risen again. After maintaining more flexibility over the last week, they have started to give the US dollar an additional boost.EURThe exchange rate is gradually approaching the 1.2000 test level. This also helpsUS Dollar vs. Japanese YenIt moves above 105.00 when buyers test the 200-day moving average at 105.60.
“The dollar’s rally was triggered by a rebound in yields and rising inflation expectations,” said Junichi Ishikawa, currency strategist at IG Securities. “This has given support to the US dollar. The US dollar currently has more of an advantage against the euro because economic growth in the euro zone appears to have lagged behind that of the United States.
This is going to be an interesting weekend, and people will be paying close attention to how much short-term compression can stay on the US dollar.GBPLater today, it also received the attention of the Bank of England. The pound was at a two-week low in some complex circumstances after Brexit.
Risk sentiment appears to have waned after the sharp rise so far this week, with US futures trading slightly lower ahead of European trading.
In terms of raw materials, gold and silver continue to decline. The next target for gold and silver may be $ 1800, while silver temporarily holds the 200 hourly moving average and this week’s low of $ 26.28.
Intraday approach and weather vane:
6:00 PM Euro zone monthly retail rate in December
20:00 Bank of England Announces Interest Rate Resolution and Policy Statement
8:30 PM Bank of England Governor Bailey held a press conference
20:30 Number of layoffs from challenging companies in the United States in January
9:30 PM The number of people who claimed unemployment benefits in the week from the United States through January 30
23:00 The monthly rate of US factory orders in December
At 03:00 the next day, Fed Daley participates in online activities
At 06:00 the next day, Federal Reserve Evans delivered a speech
Analysis of the main currencies:
Euro: The euro / dollar is under further pressure after falling for three consecutive days and is currently trading near the 1.2000 mark. From a technical perspective, from the 4-hour chart, the MACD’s green kinetic energy column attempted to expand again, the RSI indicator fell below 50 and the KDJ indicator fell further below 50, indicating that the price may resume its decline in the short term. Initial short-term support is at 1.1965 and initial resistance can be seen at 1.2080.
GBP: GBP / USD continues the volatile momentum to the downside of the previous days and is currently trading below the 1.36 mark. From a technical perspective, from the 4-hour chart, the MACD’s green kinetic energy column gradually expands, the RSI indicator continues to fall below 50, and the KDJ indicator continues to decline to approach the oversold level, suggesting that there is still room. for more prices down in the short term. Initial short-term support is at 1.3550 and initial resistance can be seen at 1.3680.
Japanese Yen: The US dollar / yen rose again on the basis of previous gains and recovered strongly for the day and surpassed the 105 mark. From a technical perspective, from the 4-hour chart, the kinetic energy column The green MACD gradually weakened, the RSI indicator rebounded to approach the overbought level, and the KDJ indicator reached the overbought level. The bullish price momentum is expected to increase or continue to rise. Initial short-term support is at 104.90 and initial resistance is at 105.45.
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