What’s driving financial market volumes right now? We’re looking at what’ trending and what isn’t. After that, we’ll dig into the markets and see what’s coming up this week.
Top market drivers in 2021 so far
1. The headlines
Number one on our list is a bit of an obvious one. Every trader loves a newsflash! If relevant, breaking news almost always guarantees volatility in the markets, especially those tied to macroeconomic factors such as Forex.
Last week’s passing of the US’ gigantic $1.9 tn aid package is a good example of the ‘watch the news and hold your breath’ attitude in the Forex markets, of late.
A lot of attention is being put on analysing exactly what American families will do with the $1,400 government hand-out. As the economy opens up, will spending increase, pushing the value of the USD up, along with production, increasing employment and greasing the wheels of the American machine?
Time will tell. But this is just one example. The news is a consistent and reliable source of information and a huge amount of volatility is generated off the back of it.
It is, of course, entirely possible for markets to do so well that they spread FOMO and encourage other traders to jump in or miss out. Nowhere has this been more obvious this year than with cryptocurrencies.
Crypto’s total market capitalisation has risen a staggering 1062.3% since this time last year. In 2021 alone, that figure has jumped 132.1%.
Crypto market capitalisation, 12 months
Talk about jumping on the bandwagon! Crypto is booming and that’s leading to increased attention from professional traders, retail investors and newbies, driving incredible volume. Is it sustainable, though?
Stock trading is always popular, but 2021 has been something else. Stock trading volumes are through the roof. Much of that volume is being driven by retail investors, who are continuing the high level of engagement that began in 2020.
But investors aren’t just piling into FAANG companies and hoping for the best. This volume is coming from all over the place. Even penny stocks are gaining traction, at one point in January making up as much as one-fifth of all US trading volume.
Celebrity endorsements of particular stocks, e.g. Elon Musk’s plugging of Signal (albeit accidentally), Gamestop and Etsy, have also garnered fresh intrigue for those not necessarily familiar with the market.
The effects of the ongoing pandemic loom large on national economies and will do so for quite some time, it seems. The International Monetary Fund has estimated a global growth contraction of 3.5 per cent for 2021.
Gold was one of the best-performing commodities last year, with prices witnessing the highest annual gain in a decade as traders looked for a hedge against volatile currencies in the wake of the pandemic.
2021 has not been kind to the yellow metal, however. The main reason? An exact reversal of last year’s hedging scenario.
With the $1.9 tn aid package now signed, sealed and already being delivered, there’s strong optimism that the US economy will show green shoots of recovery. As such, traders are jumping from the Gold hedge onto the quickly accelerating USD train.
It’s not just USD traders, either. GBP, CAD and CNY have also all shown strong recoveries.
There’s a lot of hope that currencies are now digging their way out of a hole, but we all know how fast things can change.
What’s going on in the markets this week?
Curious to learn what’s in store for you this week? Here’s everything you need to know.
Monday 15th March
● No major events are scheduled.
Tuesday 16th March
● EUR — ZEW Economic Sentiment Index (MAR)
● USD — Retail Sales MoM (FEB)
Wednesday 17th March
● EUR — Core Inflation Rate YoY Final (FEB)
● CAD — Inflation Rate YoY (FEB)
● USD — FOMC Economic Projections + Fed Interest Rate Decision
● NZD — GDP Growth Rate YoY (Q4)
Thursday 18th March
● AUD — Employment Change (FEB) + Unemployment Rate (FEB)
Friday 19th March
● JPY — Inflation Rate YoY (FEB) + Bank of Japan Interest Rate Decision
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
The Contentworks team