EM Currencies Hit Record Highs

“Wide diversification is only required when investors do not understand what they are doing.” – Warren Buffett

MARKET NEWS

Gold Slips from Four-Month High as Treasury Yields Rebound

The yield on 10-year Treasuries advanced two basis points, while the dollar rose as well. A stronger greenback makes commodities including gold less appealing for investors holding other currencies. (Bloomberg)

Wall Street edges up with U.S. bond yields in check

Stocks such as Tesla and Amazon, which have struggled in recent weeks as bond yields advanced due to rising inflation worries, were among the top boosts to the benchmark S&P 500 index with the 10-year U.S. Treasury note holding below the 1.6% level. (Reuters)

Meme Stocks, SPACs Rebound: ‘Reddit Raiders Are at It Again’

The shares of GameStop Corp. and AMC Entertainment Holdings Inc. -- the poster-children of this year’s Reddit boom -- are surging. While the catalyst is unclear, retail traders appear to be driving the action. Touts are plastered all over social media with individual investors attempting to pump their bets on Twitter, Reddit’s WallStreetBets and chatrooms on Stocktwits. (Bloomberg)

FOREX

Kiwi dollar holds gains after surprise rate hike projection

The New Zealand dollar was up more than 1% on Wednesday, holding on to gains after the central bank hinted at a possible interest rate hike by September 2022, while the U.S. dollar was steady near 5-month lows.

The Reserve Bank of New Zealand (RBNZ) surprised many market participants by projecting that it might hike interest rates as early as September next year. (Reuters)

MSCI emerging market currency index hits fresh record high

The developing markets currency benchmark scaled 1746.51, rising above peaks reached earlier this month. The index is dominated by Asian currencies such as China's yuan, which rose to a near three-year high, as the central bank guided the currency higher. (Reuters)

MORE HEADLINES

•    Bitcoin Slips Below $40,000, but Signs 'Hodlers' Returning Offers Hope
•    Fed's Quarles: Inflation to meet bar for tapering later this year
•    Amazon Agrees to Buy MGM Film Studio for $8.45 Billion
•    U.S. SEC considering new rules to tackle SPACS, crypto tokens

ANALYSIS

XAU/USD has steam to surge above the $2072 2020 high – Commerzbank

“Gold remains bid, it has recently eroded the 200-day ma, the 55-week ma and the 2020-2021 trendline. We target the $1959/65 November 2020 high and the 2021 high. These guard the $1987/78.6% retracement and the $2072 2020 peak. Longer-term, we believe that this will also be overcome.” 

“Dips lower will ideally be contained by the $1825 six-week uptrend. This guards the 20-day ma at $1779 and while above here the market should continue to maintain upside pressure.” “Key support is the 2019-2021 uptrend at $1714 and the $1670.49 June 2020 low. While above here we will assume a longer-term upside bias.” (FX Street)

Currency Volatility Set for a Comeback on Looming Policy Shifts

After more than a year of slumber, investors are preparing for currency volatility to come roaring back to life.
From Nomura International Plc to Rabobank, banks are recommending cheap protection against foreign-exchange price swings, which have been muffled so far by a barrage of liquidity and record-low interest rates.

The premise is that as growth picks up and central banks start telegraphing an end to all the stimulus unleashed during the pandemic, traders caught off guard may have to recalibrate their positions, setting the stage for sudden jolts. (Bloomberg)

CHART

Dollar / Swiss franc – Daily Candlesticks
  
Source: GKFX Prime Metatrader 4 

USD/CHF has seen a small reaction off potential support from former highs made in December and January. A break above the steep down-sloping trendline since April 1 would add some confirmation that a bigger bounce is due. - Prepared by Trading Writers*

CALENDAR

*Times in GMT

 
Source: FX Street Economic Calendar