Strong results from Twitter and Snap across the pond plus the expected dovish ECB meeting has given a lift to markets overnight and this morning. US stocks notched their best three-day advance since April with sentiment being boosted after hours by the two US social media companies, even as Intel guided lower on margins.  It seems like the online advertising arena remains strong and this is also helping tech titans like Facebook and Alphabet. They report their latest earnings next week, together with Tesla, Apple, Microsoft and Amazon in a massive week for the tech titans.

The Nasdaq enjoyed another day of gains led by tech and healthcare and is now within striking distance of 15,000 and all-time highs. The 21-day SMA capped the downside earlier in the week with bulls hugely excited about next week’s earnings releases.


USD to stay supported

The DXY had a positive session in the end yesterday after gyrating across the three different trading zones. But the dovish (lower forever?) ECB gave fresh fodder to DXY bulls and the index closed pretty close to its recent highs above 93. Trendline support from the June lows was pierced but the afternoon rally and solid close points to more gains and new highs soon.

Next week’s FOMC meeting will be watched with keen interest, though there is no new dot plot or projections. The Fed is poised to begin policy normalisation in the face of heightened inflation, although it may underline the long way to achieve this fully. But the global recovery and potential periods of risk aversion around the Delta variant during thin markets should help enhance the greenback.

GBP picks up but headwinds loom

Sterling outperformed other major currencies yesterday and has enjoyed a relatively good week. But there are clouds on the horizon with Brexit issues rearing their head again as the UK seeks to unpick the Northern Ireland protocol. The grace period for Northern Irish trade concessions ends on October 1 so the build-up to this deadline may be a potential focus for markets. The mass isolation experiment and release of restrictions is grabbing the attention in the near term.

GBP/USD has clawed its way up past the 200-day moving average and the March and April lows. Trendline resistance from the June highs lies around 1.38 so we may see the cable recovery stalling near here.


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