Goldman Sachs Group said that due to the relatively resilient economic growth, the energy price shock will keep yields at a high level and the US dollar will strengthen further in the short term.
The combination of rising inflation and relatively robust economic growth has already meant that yields will remain high for a longer period, and any further concerns about the duration of the energy shock should continue to drive relative returns consistent with changes in terms of trade, the bank’s strategist Karen Reichgott Fishman wrote on Tuesday. “This situation should also drive the dollar to strengthen broadly against G10 currencies.”
Fishman said that the most popular hedging tool was a long position in the US dollar against the Swedish krona, the euro and the pound.
At the end of February, the United States and Israel launched attacks on Iran, causing turmoil in the energy market. Safe-haven funds flowing in supported the US dollar. In addition, as the world’s largest oil producer, the United States also benefits from the possibility that high oil prices may keep inflation high, thereby forcing the Federal Reserve to raise interest rates next year.
At the same time, Fishman also said that without a change in macro policies, long-term active intervention in the foreign exchange market would be hard to sustain. “The yen is one of the main drivers of the dollar’s movement, but such a shift” does not seem imminent, she explained.
Technical analysis:
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Gold: The overnight price dropped into the yellow zone we warned about, swept through the intraday liquidity points, and rebounded as expected. For today, we continue to pay attention to the characteristics of the recent rebound after sweeping the liquidity, but at the same time, we are also preparing for the price to recover to 4700/4720. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Yesterday, our plugin indicated a blue area suggesting a buy stop could achieve a profit-to-loss ratio of around 2.5. Today, we will continue to monitor the liquidity position near 29,300. After a low sweep, we will first look for bullish signals on the rebound. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price has risen and then fallen. Although it has not dropped below 100 and our sell limit condition has not been triggered, we can still maintain yesterday’s strategy for today and continue to wait for the opportunity to sell when it breaks down and rebounds. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Key economic data and events to focus on today:
20:30 US April Retail Sales
20:30 US Seasonally Adjusted Initial Jobless Claims (in thousands) (to 0509)
