Soft monetary policy of the US Federal Reserve | 28 May 2021

Soft monetary policy of the US Federal Reserve


#WTI:


The investors remain upbeat about fuel demand recovery this summer as vaccination programs in Europe and the United States would allow more people to travel. Option bets on oil prices rising above $100 for the December 2021 Brent contract have jumped after last week’s surprisingly strong U.S. inflation data, with open interest on calls nearly tripling in May. The US Federal Reserve has published fresh statistics on the change in assets on the balance sheet. Over the week the indicator grew by $92.2 billion, renewed its all-time high, which is now $7.92 trillion. This factor will provide additional support to the oil market!


Trading recommendation: Buy 63.40 and take profit 65.85.


Soft monetary policy of the US Federal Reserve


#SP500:


US Federal Reserve Open Market Operations Manager L. Logan said primary bond dealers expect the monetary regulator to cut the QE program over the 3 quarters. Based on this, we can conclude that the Fed will reduce the purchase of assets by $15 billion every month and will complete the program in 8 months. The first increase in the Fed's interest rate will take place 3 quarters after the end of the QE program. If the Fed begins to reduce the stimulus program from January 1, 2022, then in the fall the Central Bank will no longer print money, and in the early summer of 2023 it may raise the discount rate by 0.25%. This is a positive signal for the US stock market.


Trading recommendation: Buy 4142 and take profit 4245.


Soft monetary policy of the US Federal Reserve


#CAC40:


The ECB has published fresh statistics on the change in assets on its balance sheet. Over the past week, the figure rose by €26.9 billion, against €20.8 billion a week earlier. The growth rate was the highest in the last four weeks! This is a positive signal for the French stock market! The European Commission has reconsidered the forecast for changes in GDP in the France. The indicator for 2021 has been increased to 5.7%, and for 2022 to 4.2%. This is a positive signal for the French stock market, as GDP growth always causes an increase in the capitalization of the stock market.


Trading recommendation: buy 6350 and take profit 6460.

 

David Johnson
Analyst of «FreshForex» company
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