US stock indices continue to press higher towards the end of the week as we saw yet another record close for the major indices as they continue to print fresh highs. Indices in Asia followed suit and have started the week on the front foot as they look to keep pace with their US brethren. Equities will remain higher provided that political and economic factors stay favorable, specifically markets will keep an eye out for comments out of president Trump regarding the upcoming tax reform announcement and his efforts to relax banking regulations in the US. should he remain pro-business, we will see equities push further north into uncharted territories as the prolific bull run continues. Positive US data in the week will likely also push equities higher, however, we have a double edged sword situation where by an onslaught of good data might prompt some selling as market prepare for a possible FED increase in rates which would tighten the money supply, making it more expensive to hold equities.
The US dollar has also enjoyed a fresh bout of buying this week as bulls managed to turn the tide against bears with a triumphant victory at the 100 level in the USD Index, a measure of the USD`s strength against a basket of currencies. The turnaround came on the back of bullish data and an upbeat political stance by Trump. This week will have bulls and bears back at it again, as the week is filled with key economic releases which will likely be the catalyst for the USD`s move going into the end of the month. The data ranges from inflation data to housing data to employment figures.
USD bulls will likely look to take some profits in early trade this week with sellers entering at relatively bargain prices to try their luck in anticipation of the major news announcement. This will likely lead to the USD Index falling back to the 100 level where yet again these two forces will meet head to head to decide the fate of the USD going forward. Bulls will be looking to buy the dips on positive data as they look to build their positions for an extended move higher while bears will look for opportunities to push bulls back, taking ground on the release of negative data. The push and pull will culminate at the end of the week, where the victors will stand tall as the dust settles.