STATE OF THE MARKETS

Stocks mixed amid dovish Feds. While S&P (+0.43%) and Nasdaq (+0.90%) made record highs on Monday, Dow (-0.16%) and Russell (-0.49%) pared earlier gains as markets digested central bankers meeting in Jackson Hole Summit over the weekend. Feds is remaining on the sideline and letting inflationary pressure play out, begets well for growth stocks, while forcing yields to decline. The 10Y benchmark fell below 1.28% after hitting the high of 1.38% last week.

In the commodities market, crude remains resilient after demand firmed as hurricane Ida hit the gulf coast last weekend and shut down more than 1.74 million barrel production. Gold pared earlier gains, flirting around $1,820/oz, as investors prepared for August job reports this Friday.

In the FX space, demand for Dollar persists albeit lower as Kiwi and Loonie continue to advance further in the demand territory. Sentiments is growingly bullish in the short and medium terms as Swiss and Yen were strongly offered. Chicago PMI and consumer confidence will be on watch Tuesday.

OUR PICK – USD/CAD

Trading the pullback. Recent  weaknesses in sentiments and oil price have pushed the pair to as high as 1.2950 but with Feds pulling back the narrative on tapering and rate hike, plus improved sentiments; we might be seeing another rally for Loonie. With yields favoring the commodity currency until 5 years maturity, this could work in CAD’s favor. We prefer to sell on rally strategy. Risk for further rebound remains, especially if sentiments made a U-turn.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.