VIX Fear Index Sinks To Annual Low - What's Bad About That?
31 / March / 21 Visitors: 116 ★★★★★
USA: data on crude oil inventories from the Department of Energy.
EUR / USD:
The main currency pair of the Forex market ends the month on a minor note. Firstly, the Libor dollar interest rates are rising on the London interbank lending market, which supports the American currency. In my opinion, this is a temporary factor, since in March the US Treasury is withdrawing liquidity from the financial system. Today will be the last large-scale auction from the US Treasury, where securities for $ 148.4 billion will be placed. Secondly, we are witnessing a sell-off in gold, which is also negative for the euro, since assets are historically correlated with each other.
The German company BioNTech (NASDAQ: BNTX) and the American Pfizer (NYSE: PFE) have raised their plan for the annual production of their COVID-19 vaccine by 25% to 2.5 billion doses, BioNTech reported yesterday. Active vaccination of the population will have a negative impact on the value of defensive assets, which include gold and the Japanese yen.
Investment idea: Sell 1.1725 / 1.1745 and take profit 1.1695.
GBP / USD:
On the one hand, today we can expect a decline in quotations in this currency pair against the background of the US Treasury auction, where government bonds in the amount of $ 148.4 billion will be placed. This will be the largest withdrawal of dollar liquidity from the financial system in this quarter, which may provide support American currency. On the other hand, an uptrend in the oil market may encourage traders to increase longs on the British currency, since oil and the pound have historically been correlated with each other.
There are now rumors in the market that Saudi Arabia is ready to support the extension of the oil production cut under the OPEC + agreement for May and June. Tomorrow evening we will find out the final OPEC + decision.
Investment idea: flat 1.3690 - 1.3790.
USD / JPY:
This currency pair has renewed its annual high this morning, and I expect the uptrend to continue in the near future. The Conference Board's US Consumer Confidence Indicator, which is based on a survey of about 5,000 American households, climbed to an annual high in March, signaling an acceleration in economic growth in the United States.
Against this background, I expect new records in the American stock market, which will have a positive impact on the USD / JPY pair, as assets are correlated with each other. The VIX "fear" index dropped to an annual low, which also confirms the interest of investors in the American stock market.
Investment idea: Buy 110.60 / 110.40 and take profit 111.00.