Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Investors Continue To Increase Their Risk Exposure

By JFD TeamMarket OverviewOct 21, 2021 04:28AM ET
Investors Continue To Increase Their Risk Exposure
By JFD Team   |  Oct 21, 2021 04:28AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

EU and US indices continued to gain somewhat yesterday, while the US dollar stayed on the back foot. It seems that investors continued to cheer upbeat earnings, despite maintaining bets over tighter monetary policy by major central banks.

The Fed could push the hike button in the last quarter of next year, but others who did it already are expected to do it later this year.

EU and US Indices Gain Slightly, Asian Ones Slide

The US dollar traded lower against all but one of the other major currencies on Wednesday and during the Asian session Thursday. It lost ground versus CHF and JPY, while it did not lose ground against the euro, which was unchanged this morning.

USD performance vs major currencies.
USD performance vs major currencies.

The US dollar continued to weaken broadly, suggesting that the financial world resumed trading in a risk-on fashion. However, the strengthening of the safe-havens yen and franc says otherwise. Therefore, to clear things up regarding the broader market sentiment, we prefer to turn our gaze to the equity world.

Major EU and US indices were higher or unchanged, but the picture changed during the Asian trading today. Japan’s Nikkei 225 lost nearly 1.9%, and although China’s Shanghai Composite gained, Hong Kong’s Hang Seng and South Korea’s KOSPI slid.

Major global stock indices performance.
Major global stock indices performance.

It seems that better-than-expected earnings continue to be the main driver for the markets. Yes, they may not point to a skyrocketing global economy, but let’s not forget that the bar was set low in the season. Thus, anything better than that is music to investors’ ears.

The slide in Asian indices could be due to Evergrande's (OTC:EGRNY) failure to seal a deal on selling a USD 2.6bn stake in its property services unit. Yet, China’s Shanghai Composite was the only index in positive territory. This may be due to the property giant securing an extension of more than three months on a defaulted bond or due to Chinese officials reassuring investors that overall risks in the property market are controllable.

With long-dated yields around the globe also rising, it seems that investors have not scaled back their tightening bets, despite increasing their risk exposure lately. According to the Fed funds futures, they anticipate an interest rate hike by the Fed in the last quarter of 2022.

A while ago, such a move was expected for the first three months of 2023. That said, other central banks have already hit that button, like the Reserve Bank of New Zealand (RBNZ), and others expected to do it later this year, like the Bank of England (BoE). Therefore, we would expect the US dollar to continue underperforming against the Kiwi and pound, especially if sentiment remains supported for a while more.

Fed funds futures market expectations on US interest rates.
Fed funds futures market expectations on US interest rates.

GBP/USD – Technical Outlook

GBP/USD traded higher yesterday after it hit support at 1.3742. However, the advance stopped near the peak of Oct. 19, at 1.3835, before retreating. Overall, the pair continues to trade above the upside support line drawn from the low of Sept. 30. We would consider the near-term outlook to be positive.

A clear and decisive break above 1.3835 would confirm a forthcoming higher high, but we would like to see a clear move above 1.3854, the peak of Sept. 15, before seeing significant advances. Such a move could pave the way towards the high of the day before, at 1.3913. That said, we see the latest pullback to test the 1.3742 zones before the next up move.

The move that would make us start examining a bearish reversal is a dip below 1.3675. This may confirm the break below the upside support line taken from the low of Sept. 30 and could allow declines towards the 1.3575 zone, which was a support on Oct. 12 and 13. We may see the bears pushing the action towards the low of Oct. 4, at 1.3532.

GBP/USD 4-hour chart technical analysis.
GBP/USD 4-hour chart technical analysis.

NZD/JPY – Technical Outlook

NZD/JPY has been in a short uptrend since Oct. 6, marked by an upside line taken from the low of that day. The rate hit resistance at 82.50 during the Asian trading today and pulled back. In any case, the rate remains well above the Oct.6 upside line, and as long as this is the case, we will stay positive.

The bulls decide to come alive from 81.22, marked by the inside swing high of Oct. 17. A rebound may result in another test at 82.50, where a break could take the rate into territories last seen in 2017. The next resistance may be at 82.80, marked by the high of Sept. 20 of that year, the break of which could carry larger bullish implications, perhaps towards the 83.90 zones, defined as resistance by the peak of July 27, 2017.

On the downside, we would like to see a dip below 80.17 before we start examining whether the bears have gained complete control. The rate would already be below the pre-mentioned upside line, and we may see declines towards the 79.16 or 78.60 levels. If neither barrier can halt the slide, the rate could slide towards 77.93, defined as a support by the inside swing high of Oct. 6.

NZD/JPY 4-hour chart technical analysis.
NZD/JPY 4-hour chart technical analysis.

As for Today’s Events

The only releases worth mentioning are the US existing home sales for September, with expectations pointing to a slight increase, and the initial jobless claims for last week, which are forecast to increase fractionally. We also have two speakers on today’s agenda: Fed Board Governor Christopher Waller and RBA Governor Philip Lowe.

Investors Continue To Increase Their Risk Exposure

Related Articles

Paul Rejczak
S&P 500: Is A 5% Correction Enough? By Paul Rejczak - Dec 03, 2021 1

The S&P 500 bounced from the 4,500 level on Thursday as it retraced most of its Wednesday’s sell-off. Was it a reversal or just another upward correction? The broad stock...

Kevin Beckman
Bitcoin Range-Bound As Volatility Ebbs By Kevin Beckman - Dec 03, 2021

Bitcoin keeps changing hands in a tightening range, with volatility in the cryptocurrency markets keeps fading this week. The BTC/USD pair is stuck between the 20- and 100-DMAs,...

Investors Continue To Increase Their Risk Exposure

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval. 68.02% of the retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure - .
Continue with Google
Sign up with Email