USD is strong, and Yields are increasing!
The first official trading day of 2022 has important signals to take care of. US dollar returns with great power and rebounded by more than 0.6% on Monday to 96.30 and today could hold the position so far with a little bit change higher and down again. At the same time, after touching the 6-week high, and closing at 1.64%; the US 10-year bond Yields now trading a bit lower around 1.62%, however, it is still so high compared with last December's levels.
Although the United States along with other economies are still suffering from the pandemic (the hospitalization rate in the past four months has exceeded 100,000 for the first time in the US, and the total infected cases exceeded 50 million), in the stock markets we can still see the new records. This positive market sentiment is mostly is due to the lack of strict health measures in most economies, including the United States.
Besides that, we had great news from individual companies. For example, yesterday Apple's market volume hit US$3 trillion, which is for the first time in the history of US stock Markets. Also, Tesla’s stock price, recorded the largest increase since March last year and now with Facebook, they are also members of the Trillion dollar's club. After all these changes, the market expects that the economic recovery will proceed in a modest way of growth, but stable and longer.
This positive sentiment in the market helped the Oil bulls to run faster and higher above $76 US dollar and increasing bond yields suppressed the safe-haven attractiveness of gold. As of yesterday's close, spot gold fell by about $30 from a daily high to close under $1801. By 2021, the gold underperformed and closed down nearly 4%, the largest annual decline since 2015. at the same time, we should not forget the lack of liquidity also can increase the market risk and movements. Many big players are still on holiday, and they will start their trades from next week.
On the data front, yesterday, the US Markit manufacturing PMI at 57.7 in December, was in line with market expectations but slightly lower than the previous month at 57.8. Also, the construction expenditure in the US recorded 0.4% in November, missing the market expectations of 0.6%. Later this week, the market will focus on US labor data such as ADP, the number of layoffs by challenger companies, initial jobless claims, the unemployment rate, and most importantly the NFP data. The expected good performance of the data will further boost the US stock markets, as we could see the new records high in the first official trading day in the future markets.
At the time of writing, while most European indexes, trading with a 1% gain on average, both SP500 and DJI in the US futures markets with 0.4% gain, printing new all-time highs.
From the technical point of view also, as we can see in the bellow chart, DXY returned above the bullish trend line and RSI above 60, it has enough support to continue its way. USD Index has powerful support at 96.30, and the next target is the third resistance at 96.76
