17.05.2021: Fed downplays inflation spike (S&P500, DXY, USD/CAD, BTC/USD)

The US stock market closed last week with confident gains of three benchmark stock indices. Earlier in the week, the US stocks encountered sell-offs for three days straight. A steep fall is considered a downward correction which came as a result of soaring inflation in April. The latest CPI report logged the highest surge in consumer prices since 2009. However, the US Fed downplays the gravity of the situation, saying that the leap in inflation was transitory. Indirectly, the Fed’s viewpoint is proven by a report released on Friday that unexpectedly showed flat retail sales in the US. So, the market calmed down and resumed its growth.

00:00 US market and main indices growth
00:52 S&P500
01:31 DXY
01:57 USD/CAD
02:21 Bitcoin
03:32 Vice Chairman of the US Fed Richard Clarida speech

The S&P500 closed on Friday with a 1.5% weekly gain. Today it climbed to 4,170. Apparently, the US stocks are trying to hit one-year highs after the market gained strong momentum on Friday. At the same time, a lot of stock investors are willing to sell their shares at such elevated levels. Hence, the S&P500 is expected to trade firmly in the corridor of 4,130 to 4,210 until fresh macroeconomic data is published later this week.
Meanwhile, the US dollar wants to regain a foothold following a steep decline on Friday. Today, its index is trading at near 90.30. Experts do not see either technical or fundamental preconditions for the greenback’s growth. Therefore, the US dollar index is likely to trade in a narrow corridor of 89.80 to 90.60.
The US currency is extending weakness against its Canadian rival. Today the USD/CAD pair is trading at about 1.2105. Analysts expect the corridor of 1.2040 to 1.2140. As the medium-term outlook for the US dollar is bearish, the loonie will be able to assert strength in the near time.

When it comes to the crypto market, it is facing a severe downturn over the last half a year. Bitcoin shed over 10% of its value in the last 24 hours as investors are unnerved in light of statements of Elon Musk. Tesla CEO suggested at the weekend that the company is considering selling or may have already sold some of its holdings in the cryptocurrency. Moreover, Tesla boss announced that electric cars cannot be paid in Bitcoins. All in all, discouraged investors rushed to sell their crypto holdings. Meanwhile, Bitcoin is trading at around 45,000 dollars per token. This price level is exactly in between resistance and support. The most popular digital token has not determined its further trajectory yet. However, investors are braced for a decline to 42,000 – 44,000 dollars. Afterwards, the number one cryptocurrency is likely to make an upward correction.  
In his speech today, Vice Chairman of the US Fed Richard Clarida reiterated that the central bank is going to stick to the ongoing accommodative monetary policy. In other words, a monthly volume of bond buying amounts to 120 billion dollars. Besides, the federal funds rate is put on hold at a record low of nearly zero. Such statements from Richard Clarida and his colleagues could put pressure on the US dollar.

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