The dollar is hitting back today, fueled by rising US yields. Besides, the dollar also maintains stronger than expected manufacturing figures. While European stocks are in the thick, US futures opened higher. The yen is now the worst, followed by the Australian and Canadian. Overall, it remains to be seen if the dollar will be able to withstand the rebound.
Overall, market dynamics have not changed, as a strong risk appetite remains. Today the focus is on whether the economic sentiment of the ZEW in Germany and the GDP of the eurozone can lift the euro. Otherwise, the current trend should continue shortly. Meanwhile, gold fell, but technically the fall in gold is in line with a rebound in the dollar.
Germany’s ZEW economic sentiment index rose to 71.2 in February from 61.8, well above 60.0 expectations. The current situation index fell to -67.2 from -66.4, surpassing expectations of -67.0. The Eurozone ZEW Economist Sentiment Index rose to 69.9 from 58.3, well above expectations of 59.2. The current situation index rose 4.3 points to 74.6.
Financial market experts are optimistic about the future. They are confident that the German economy will return to a growth trajectory over the next six months. In particular, consumption and retail trade are expected to rebound significantly, which will be accompanied by higher inflationary expectations, ”comments ZEW President Achim Wambach.
For gold, any gains from the general risk environment were offset by higher US yields. Gold’s overall technical position remains fragile and will come under further bearish pressure this week if US yields continue to rise.
Gold dropped to week and a half lows early in the North American session, and bears are now looking for a sustained break below the $1800 round mark.
The precious metal struggled to capitalize on its intraday positive move, but instead met some fresh supply in the $1826-27 region and now appears vulnerable to further declines. The prevailing risk environment, as evidenced by the continuation of the recent bullish gains in equity markets, held back the early rally for the safe-haven XAU/USD.
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