24.09.202109:21 Forex Analysis & Reviews: US stock market enters narrow range

Exchange Rates 24.09.2021 analysis

US stock indices showed strong growth following the results of the Fed meeting. The Dow Jones rose by 1.5%, the NASDAQ Composite gained 1%, and the S&P 500 grew by 1.2%.

Stock markets in Asia closed in the black. Stock indices in Japan advanced by 2%, while in China they added 0.4%.

As for the oil market, Brent crude rose by another $1 yesterday and by $ 2 in two days. Its price reached $77.40, approaching the annual highs. Oil prices are gaining momentum amid the recovery of global demand, the firm position of OPEC not to increase production, and record gas prices in Europe.

The epidemiological situation in the world remains unchanged. The number of new cases in the world holds approximately near the high of 500,000 per day. Yesterday, there were 515,000 new cases. The US posted an increase of 127,000 cases yesterday. In Europe and in the UK, there were 36,000. Having decreased from the highs of mid-August by about 30%, the pace of infection does not slow down further. Vaccination in the United States and Europe has reached the levels of 65%, However, it has recently slowed down sharply. The remaining 35% of the population does not want to be vaccinated, which prevents the governments from curbing the virus spread.

The S&P 500 is trading at 4,449. It is likely to stay in the range of 4,410-4,490. US employment data came out unexpectedly weak yesterday. The number of initial jobless claims increased to +350,000 in a week. Some analysts believe that this indicator is quite positive for the economy recovering from the crisis. More people began job-hunting, including those who stopped looking for it a long time ago. However, the number of continuing jobless claims also rose to 2.84 from 2.7 million. This figure has been constantly decreasing for many months until this week. Probably, the robust growth in the labor market is almost exhausted. On the other hand, this is a positive for the stock market. The slowdown in employment growth may force the Fed to postpone the monetary policy tightening.

Economists noted another positive sign of the recovery of global demand and the global economy. Global steel production jumped by 10% since the beginning of the year. The CIS countries increased steel production by 17%, in the EU by 20%, and in Germany by 17%.

The US market entered the narrow range. It is likely to be quite sensitive to news. So, its further movement depends on fundamental factors. Yet, it is envisaged to remain generally at the same levels until some market-moving events trigger its fall or rise.

The US dollar index is trading at 93.10. It is likely to remain in the range of 92.80-93.40. The US dollar that started to grow immediately after the announcement of the Fed's decisions, returned to its previous levels yesterday. Investors seem hesitant to pick up a clear-cut trend.

The USD/CAD pair is trading at 1.2670. It is likely to stay in the range of 1.2550-1.2720. The pair declined yesterday due to the weakness of the US dollar. However, its decline was much stepper in comparison with the US dollar's decline. An increase in oil prices is weighing on the pair, pushing it down.

So, currently, the stock market is likely to stay in the narrow range. It is recommended to open long positions after sharp falls.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Jozef Kovach,
Esperto analitico di InstaForex
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