Equity markets extended gains overnight as risk appetite continue to improve. Strong economic figures out of the United States and President Biden reaching a bipartisan infrastructure deal worth more than $500 billion boosted market sentiment and pushed US stocks to fresh record highs. There was no such euphoria in Europe and Asia, but the odds that global equity markets will continue to gain momentum in the short-term remain fairly high.
The JPN225 index has finally gained some momentum following its break above the 28,836 resistance level. The index will likely test the falling trendline resistance from the 2021 high soon. Should JPN225 overcome this hurdle too, an extension of the rally towards 30,714 points appears likely.
Meanwhile, the UK100 is benefiting from the Bank of England taking a slightly more dovish stance than expected, along with rising growth expectations for the UK economy. The index could soon test resistance at 7120 points and a clear break above this would signal that a rally towards 7215 is imminent. However, the sharp spike in new COVID-19 cases in the UK remains a concern for investors and could potentially slow the UK100 down.
2021 has been a great year for commodities so far – except for Cocoa. The commodity has been steadily declining since the beginning of the year, and the on-going supply glut is hinting at a continuation of the downtrend. Traders will keep a close eye on the support zone between $2316 and $2334. A break below the former level could accelerate downside momentum and pave the way for a deeper correction towards $2090.
Looking at the exotic currency pairs - MXN/JPY is one to keep an eye on. The Mexican Peso has been benefiting from rising Oil prices, and today´s unexpected rate hike by the country´s central bank gave the currency another major boost. Rising risk appetite also means that the Peso is becoming increasingly attractive, while the Japanese Yen – a traditional safe haven – is losing its appeal.
MXN/JPY recently bounced off the rising trendline from the March 2020 low and cleared a major obstacle by breaking through 5.5380 resistance. The currency pair could potentially extend gains to 6.0140 in the near-term.
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With equity markets rising to fresh record highs in the United States and Europe, risk appetite is rising again