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12.07.202111:50 Forex Analysis & Reviews: Overview of the US market (07/12/2021)

Exchange Rates 12.07.2021 analysis

US stocks grew very strongly last week, so major indices closed relatively higher on Friday. Dow Jones was up 1.3%, while S&P 500 and NASDAQ climbed 1.1% and 1%, respectively.

UK indices also rose 1.3%. And this morning, Asian markets showed a sharp rise, by as much as 2.2% in Japan indices and 1.3% in China indices.

The oil market also posted a noticeable increase, winning back half of the fall it had at the beginning of last week. Now, Brent costs $ 75 ahead of US inflation data on Tuesday.

Talking about economies, Japan reported that orders for mechanical engineering products jumped 7.8% in May, which is significantly higher than the forecast. Germany also declared that its GDP grew 10.7% in June.

And over the weekend, G20 finance ministers met, during which they approved an agreement about setting the minimum level of income tax for multinational companies at 15%. The final approval of the deal is scheduled for October.

With regards to the world's epidemiological situation, latest data say new COVID-19 cases increased over the weekend, with UK recording 31,000 new infections and US listing 6,600.

Going back to the markets, S&P 500 hit 4.369 points and ranged from 4.320 - 4.400 points. Most likely, it will move according to new economic data that will be released this week. One example is US inflation, which is forecast to remain at a very high level.

Surprisingly, the USD index fell to 92.10 points and ranged from 91.60 - 92.60 points. This suggests that dollar is not ready to soar yet, and like the stock market, is waiting for the report on US inflation.

Accordingly, USD/CAD also declined in price, trading at 1.2470. It ranged from 1.2400-1.2550.

Conclusion: Economies of developed countries continue to recover, but the worrisome factor is inflation, primarily in the United States. Seeing a sharp jump could force central banks to tighten their monetary policies, which will cause a decrease in economic activity and deep correction in the stock and commodity markets.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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