Last week we saw some interesting moves across the markets. Stocks remain in recovery mode, while the dollar hit some resistance after the Nonfarm Payrolls report showed fewer jobs were created than expected. However, the unemployment rate declined from 4.3% to 4.2%, making the report somewhat mixed. Even so, the positive risk-on sentiment remains intact, especially as more ships are now moving through the Strait of Hormuz, which could continue to support market sentiment.
When looking at the Dollar Index, notice that we still have only three waves down from the most recent highs. It looks like a counter-trend move, possibly just a wave four correction. If we see more upside today, and more importantly on Tuesday, since Mondays can often be a bit tricky, then a break above 101.00 and the channel resistance would be an important confirmation of further gains for the dollar. That would likely put renewed pressure on other currencies. Even the Japanese yen already seems to be back in a bearish trend.
Also, look at the US Treasury futures. We have seen some strong reversal down from the 110.00 area. It looks like that rally unfolded in three waves, and if that’s indeed the case, then more weakness could follow. That would be bearish at least towards 108.25. If Treasury futures move lower, it means yields are rising, which would continue to support the US dollar.
I will talk about this and much more in our webinar, today 15CET.
GH
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