Archives of “February 4, 2021” day

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EURGBP trades to lowest level since May 2020

  
Analysis, Forex

Run higher in GBPUSD and run lower in EURUSD sends the EURGBP down

The EURGBP is one of the biggest mover’s today as bearishness in the EURUSD sends that pair lower, while the GBPUSD as moved higher after the BOE turn its back on negative rates.
Run higher in GBPUSD and run lower in EURUSD sends the EURGBP down
The moved to the downside has taken the price to the lowest level since May 12. Looking at the daily chart, the pairs low has also tested the underside of a broken trend line at 0.87466. The low price today reached the 0.87505. Buyers may be leaning. Staying on the daily chart, a move lower would next target the 61.8% retracement of the range since December 2019. That level comes in at 0.87326.
Last Thursday, the price high stalled near the 50% retracement at 0.88788 and started the push lower and away from that midpoint and swing area (see green numbered circles and yellow area). Going forward, staying below the swing area keeps the bears more in control from the daily chart perspective.
Drilling to the hourly chart, at the highs today, the price tested its  200 hour moving average (green line in the chart below), but found sellers leaning against the level. Those traders were rewarded after the Bank of England decision with the tumbled lower. The close today did crack below a lower channel trendline, but quickly reversed. That trend line has reestablished as support currently at 0.8756. It would take a move below that level to solicit more selling from a technical perspective on this chart. On the topside the 0.87948 low from Tuesday is now resistance. That level is also the midpoint of today’s trading range.
EURGBP on the hourly chart

German DAX for the 4th consecutive day. UK FTSE 100 lags in trading today

  
Analysis, Global Indices

Most European indices close higher

The German DAX rose for the 4th consecutive day. It’s index increase by 0.86%. The UK’s FTSE was a laggard today after the Bank of England decision.

A look at the closes:
  • German DAX, +0.9%
  • France’s CAC, +0.8%
  • UK’s FTSE 100, -0.1%
  • Spain’s Ibex, +1.3%
  • Italy’s FTSE MIB, +1.6%
in other markets as London/European traders exit:
  • spot gold -43.6 points or -2.3% at $1790.38
  • spot silver $-0.76 or -2.83% $26.12
  • WTI crude oil futures up $0.25 or 0.45% of $55.94
US stocks are trading at session highs:
  • S&P index up 28.23 points or 0.74 presented 3858.04
  • NASDAQ index up 100 points or 0.73% at 13710.34
  • Dow industrial average up 256 points or 0.84% at 30980

BOE leaves bank rate unchanged at 0.10%

  
  Analysis

BOE announces its latest monetary policy decision – 4 February 2021

  • Prior 0.10%
  • Bank rate votes 0-0-9 vs 0-0-9 expected
  • Gilts purchases £875 billion
  • Corporate bond purchases £20 billion
  • Total asset program £895 billion (unchanged)
  • Existing stance of monetary policy remains appropriate
  • Financial markets have remained resilient
  • GDP is projected to recover rapidly towards pre-virus levels over 2021
  • Vaccine rollout is assumed to lead to an easing of virus-related restrictions
  • Outlook for the economy remains unusually uncertain
  • CPI inflation is expected to rise quite sharply towards the 2% target in the spring
  • Does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably
  • Full statement
The BOE also cuts its growth projections for the year, estimating that 2021 GDP will be at 5% as compared to the November forecast of 7.25%. That said, the pound is jumping higher as the central bank steers clear from firm commitment to negative rates once again.
In the updated review, the BOE says its actions should not be construed as a signal that negative rates are coming and that it carries an operational risk. However, the central bank still says that financial institutions should start preparations if needed.
As such, the BOE also says that it is starting work on a tiered system in case there is a need to cut rates below zero. But for now, the odds are that is looking less likely to be the case.

Dogecoin jumps by nearly 60% on Elon Musk tweets

  
  Analysis

To the moon?

It may be all a publicity stunt at the end of the day but as the saying goes, there is no such thing as bad publicity no matter how things play out.
Elon Musk is out with a series of tweets in the past hour, starting off with “Doge” and then following it up with a picture of himself as Rafiki lifting Simba (with the Doge symbol superimposed on it). And then now he tweets out: Dogecoin is the people’s crypto

 

Doge
And price is up by nearly 60% on the back of that. Wild.

Germany’s Ifo institute says expects virus restrictions to last until mid-September

  
  Analysis

That isn’t quite an encouraging outlook

European lawmakers have talked up a big game of getting people vaccinated by the summer, in hopes of opening up travel to bolster tourism later in the year. That is providing some optimism to the likely double-dip recession in the region to kick off 2021.
The virus timeline remains arguably the biggest uncertainty in how things are playing out at the moment and if the vaccine rollout doesn’t progress smoothly or if virus variants threaten the need to prolong tighter restrictions, expect that to

Nikkei 225 closes lower by 1.06% at 28,341.95

  
Analysis, Global Indices

Asian equities fall as risk sentiment moderates on the week

Nikkei 04-02
Japanese equities slump as rising yields add to some uneasiness in the market but the drop also comes amid some moderation in risk sentiment after the gains this week.
Adding to that is a slight jump in short-term rates in China once again, bringing back concerns about liquidity constraints ahead of the Lunar New Year holidays. The PBOC also didn’t do much to ease those nerves with the latest injection today.
The Hang Seng is down by 1.2% while the Shanghai Composite is down by 0.7%, while S&P 500 futures erased slight gains to be down by 0.2% currently.
In FX, the dollar continues to hold steadier across the board with EUR/USD still knocking on the door of a firmer test of 1.2000 while USD/JPY is keeping with a break above the 105.00 handle for the time being.
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