Currently, the market is displaying a risk-on attitude towards stocks, signaling strong investor confidence. Well, the USD and bond yields are also recovering with the equity market which is a very unusual activity. This disparity prompts an intriguing debate: which market trend is right and which one is wrong?
From my analysis, the surge in stock prices is attracting a wave of investors eager to capitalize on the momentum, potentially leading to a shift from holding dollars to buying stocks. This dynamic could contribute to a weakening of the dollar or at least curb its ascent. A critical event on the horizon is the upcoming release of the US CPI data, set for 14:30 CET tomorrow. The market is bracing for a decrease in inflation rates from 3.4% to 2.9% year-over-year, an update that could significantly influence market movements.
Turning our gaze to the Dollar Index (DXY), it appears to be in the midst of a corrective rally, the same as US yields that are moving into 4.3-4.6%.
For a deeper dive into these trends, I invite you to join our webinar today at 15:00 CET.
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