Summary:
- USD falls to lowest level since 2013 on Martin Luther King day
- GBPUSD rallies to post-Brexit high
- Brent Oil hits 3-year high; Gold and Copper also rise
- Bitcoin rises as South Korean ban postponed
- The week ahead; Stretched markets set to snapback?
The US dollar has been under pressure once more today despite the absence of many US traders due to the bank holiday stateside in memory of Martin Luther King. The Greenback has dropped to levels not seen since 2013 and with little by the way of economic data out this week there appears to be limited opportunities for a release coming to the aide of the beleaguered buck.
The EURUSD has popped up to trade within a whisker of the 1.23 handle after breaking higher on Friday but the GBPUSD is perhaps at an even more interesting level. Cable has moved above 1.38 to hit a post Brexit vote high and given that this level had previously provided support to major historical sell-offs before being broken in the wake of the EU referendum it could be pivotal to see if the market can recapture this level.
The weakness in USD has boosted the commodity index with Gold moving above 1340, Copper having its largest jump in 2 months and Brent Oil hitting a 3-year high. The incredible rally in Oil continues to make new ground despite another increase in the net speculative positioning according to the most recent COT data. The positioning is now at its highest level in a year and there could be seen to be a suggestion that a pullback is long overdue.
Cryptocurrencies have had a fairly mixed day with Bitcoin and Litecoin both making steady gains of around 4% but Ripple and Ethereum have fallen lower. Bitcoin’s gains come after some upbeat news from South Korea with recent reports suggesting the that the expected ban on cryptocurrency trading will be postponed. Price has moved back above the 14000 level during today’s session but the market remains below the 50 day SMA and is currently sat at a potentially key level going forward.
With several strong moves seen in the stock markets, the Euro and US dollar and Oil at the start of the year with little by the way of additional fundamental support, there is a case to be made for a pullback. In an earlier post we pointed out several potential warning signs against some of these moves that could be seen as contrarian signals which suggest that they are a little overdone at present.