Analyzing the current situation in the currency markets, we can confidently say that the start of the consolidation period will be postponed for some time due to the balance established in the markets between the forces influencing it.
Now, the stock market is setting the general tone in the markets, whose dynamics are guided by both the currency and commodity markets. The main movements will start on it and then spread to other segments of the global market.
Why is this happening?
In our opinion, this is due to the fact that the recent topics that act as the most important role in shaping the mood in the markets – production and use of vaccines, the promised new incentives from J. Biden in the amount of $ 1.9 trillion, as well as extremely high expectations of the global and US economic recovery, have somewhat faded. Last month, it has become clear that all the above-mentioned factors, or the promised new support measures have not yet been implemented, which is still unknown when it will be done. At the same time, massive vaccination of the population and the active recovery of economic growth is facing some serious difficulties.
As a result, investors, who don't have any advantage, turned their attention to the published economic statistics. Unfortunately, they also turned out to be generally negative both in Europe and in the United States. In this situation, we do not do something about other countries and their markets, as they are in close connection with European and North American ones and simply depend on them in many respects. Due to the lack of clear signals from the incoming economic data, the markets focused on the corporate reporting season. However, everything here is not also very simple and unambiguous if the situation is extremely simplified. This is the reason we are seeing actual sideways dynamics amid increased volatility.
The currency market also moves under the influence of the same factors as the stock market, with the exception of corporate reporting of companies. However, the recent meetings of the ECB, the Fed, the Central Bank of Canada, and so on, have shown that regulators cannot offer anything new and efficient to the markets in terms of monetary policy. All of these regulators have left their monetary policies unchanged and have practically shown their weakness to do anything.
If we evaluate the markets' situation, we believe that it will remain the same next week.
Forecast of the day:
The AUD/USD pair is fully affected by the dynamics of demand for risky assets, remaining in a short-term downward trend. We believe that if it breaks through the 0.7665 mark, it will rush to the upper border of this trend – level of 0.7745.
The NZD/USD pair remains in the range of 0.7100-0.7235. We believe that it will remain in this range in the near future. If the mood of the market improves and the pair holds above the level of 0.7150, it may further increase to 0.7235.
