USD, Euro, CAD, AUD Price Analysis
Stocks, Social Mood Continues to Diverge
The risk on environment continues to shine and stock indices in the US are either nearing or have already eclipsed their yearly open. That’s pretty respectable when we put that in context with historic hit to economic data as the world struggled with a global pandemic. And now we can add in social unrest around a topic that does not look to have a simple or nearby solution, yet the risk-on behavior just continues to drive.
It’s long been said in the post-Financial Collapse backdrop that markets have divorced from economics. And with the numerous instances of ‘bad news being good’ in the recent past, that makes sense. But now – it seems as though markets aren’t reflecting the social mood at all, much less the fear of a continued struggle with covid. And given the mass protests that have taken place and multiple experts voicing fear over another wave of coronavirus as social distancing measures were de-prioritized to a larger cause - there’s a very legitimate prospect of risk punctuating the horizon as the world now struggles with an entirely new risk factor; one that can’t be addressed with a vaccine at the same time as a global pandemic.
Nonetheless, the risk trade remains in full bloom; and even with all of those risk factors mentioned above, there’s one very important thing that can keep this driving – the prospect of continued government support being served into markets. This has impacted the US Dollar[1] mightily of recent, particularly over the past couple of weeks as the Greenback has broken into a bearish trend after almost two full months of range-bound activity.
US Dollar Four-Hour Price Chart
Chart prepared by James
