Weekly Market Report

Upward Correction Possible But Bias Still Bearish Over the past two weeks, the US dollar has surged across the board. And, considering this currency has stood as the primary funding currency to a burgeoning carry trade, it makes sense that the greenback’s performance could be interpreted as a sign that risk appetite is toppling. However, cause and effect do not connect here – at least not yet. Instead risk trends have extended the congestion that has set in since October/November; and the period of consolidation has allowed the world’s reserve currency correct speculative and fundamental extremes on its own. Yet, that should not be taken to mean that investor optimism, and the leveraged positioning it has encouraged, will not go uncontested.

The British Pound weakened for the second-day and slipped below the 200-Day SMA (1.6014) to reach a fresh monthly low of 1.5998, and the currency is likely to hold the broad range from earlier this year as investors weigh the outlook for future policy.