While the US dollar overall gained against other major currencies as indicated by the USDX, which represents a basket of other major currencies against the greenback, the sentiment in emerging markets looked quite different. Not only did the USD/ZAR rate decline below the 15.0-mark, but the USD/TRY pair continued to move lower, trading by Tuesday morning at the lowest level since August.
Major stock market indices continued moving to the upside by Tuesday morning after already strongly rebounding at the start of the week. Despite the still prevailing lockdowns in many parts of Europe and some other parts of the world, investors seemed to be upbeat that with the rollout of the vaccination campaigns the recovery after the pandemic could kick in rather sooner than later.
Bitcoin remained relatively unchanged over the past few days, trading mostly around the $33k-$35k range, while Ethereum surged higher above the $1,400 mark. Ripple prices meanwhile strongly retraced from the recent surge, falling more than 50 per cent from the recent spike that occurred on Monday with one toke traded at times above $0.75.
On Tuesday GDP data from Italy and the EU can be expected, while in the US the weekly Redbook store sales statistic will be released. Later on in New Zealand the Labour Cost Index for Q4 will be published.
While the euro traded overall relatively stable compared to other major currencies and for example gained against the Swiss franc (CHF), while trading lower compared to the pound sterling (GBP), the strength of the US dollar pushed the common European currency again below the 1.21-threhsold.
Fundamentals in Europe were overall positive with the EU manufacturing PMI only slightly declining from the 55.2 in the previous reading to now 54.8, while the unemployment rate stood as expected unchanged at 8.3%.
US data meanwhile indicated a continuous increase in construction spending, which increased by one per cent in December on a monthly basis and was up by 5.7% compared to the same time in the previous year.
On Tuesday consumer price index data will be released in France and the EU and Italian GDP statistics for Q4 will be released.
Oil prices moved sharply higher on Monday with a further upside observed by Tuesday morning, when a barrel of WTI crude oil traded at the highest price since February of 2020. Relative positive economic fundamentals from around the world and especially China, coupled with the production cuts in Saudi Arabia might have helped improve the economic sentiment. Furthermore, some European countries and US states are starting to announce plans to ease the lockdowns in place, giving hope that the lockdowns and their economic impact might subside over the next months.
Even more positive might have been the assessment by investment bankers from Goldman Sachs, as they estimate that the global oil demand might return to pre-pandemic levels as soon as August this year.
After the significant decline in crude oil stockpiles last week, traders might look again closely at the newest numbers as released on Tuesday by the American Petroleum Institute (API) and on Wednesday by the Energy Information Administration (EIA).
Major stock market indices like the US 500 strongly rebounded on Monday from the slump of the previous week, making up for a sizable portion of those losses. With the move to the upside the Volatility Index VIX, which measures the implied volatility of options on the S&P 500 index also noticeably declined, but stayed nonetheless elevated compared to its level last week, before the market turmoil started.
Performance between different sectors was still quite mixed. While energy stocks (US Energy ETF +0.59%) traded only slightly higher, chip sector stocks (US Semiconductors ETF +3.78%) ended the day with a strong upside.
Some vaccine maker stocks like Novavax (+21.92%) and INOVIO (+33.23%) continued pushing towards new records. This was however not the case for all health care stocks (US Health Care ETF +0.31%) as for example BioNTech (-1.20%) and Gilead Sciences (-0.67%) closed lower.
As the earnings season continues, more and more results can be expected over the next days. On Tuesday for example companies like Alibaba, Pfizer, Sirius XM will release their quarterly results. Then on Wednesday results from Dynatrace, Check Point, Spotify and others will come in.