Key Takeaways:
Dollar surges past post-2022 range
US economic exceptionalism drives confidence
Upside risk with potential global economic rebound
Recovery in Europe and Asia not expected, but possible surprise
A rally in technology companies drove a rebound in stocks after weaker US consumer confidence data.- Primary uptrends remain intact for equities despite recent pullbacks.
Negative breadth may not affect high-quality stock indexes with robust price momentum.
Qualcomm Inc. climbed after winning a trial against Arm Holdings Plc.- S&P 500 is on track for a strong annual return and back-to-back years of gains.
A potential "Santa Claus Rally" could follow last week’s action in the markets.- A positive "Santa Claus Rally" has historically led to strong annual gains for the S&P 500.
- Dollar breaks free from technical resistance
- Poised for more gains amidst favorable US economic data
Market participants betting on dollar strength against major currencies
The US Dollar (USD) is close to a two-year high.- The US Dollar gained ground after a big upside revision in the November Preliminary Durable Goods release.
A trend line from December 28, 2023, is acting as a moving cap for the US Dollar Index.- Higher interest rates generally strengthen a country’s currency and impact the price of Gold.
The final trading day before Christmas is expected to have a rather light economic calendar, leading to short-term moves in trading.- A resistance level of 109.29 and a support level of 107.35 are crucial for the US Dollar Index.
Dollar Surges Past Post-2022 Range
The US Dollar has recently surged past its post-2022 range and is close to reaching a two-year high. This surge has been driven by economic exceptionalism in the US, leading to increased investor confidence. Market participants are betting on dollar strength against major currencies, with the potential for more gains amidst favorable US economic data.
Stock Market Trends
Despite recent pullbacks, primary uptrends remain intact for equities, with high-quality stock indexes showing robust price momentum. A rally in technology companies has contributed to a rebound in stocks, following weaker US consumer confidence data. Companies like Qualcomm Inc. have seen gains after winning legal battles. The S&P 500 is on track for a strong annual return, and there is speculation about a potential "Santa Claus Rally" in the markets.
Global Economic Outlook
While recovery in Europe and Asia is not expected, there is the possibility of a surprise rebound. Upside risks are present for a potential global economic recovery, which could impact various markets. The US Dollar’s strength and trends in interest rates also play a role in shaping the global economic landscape.
By closely monitoring these trends and developments, investors can make informed decisions in navigating the complex and ever-changing financial markets.