19.03.2021: US stock market reaches ceiling (DJIA, DXY, USD/CAD, BTC/USD)

The US stock indices are retreating from record highs as investors are unwilling to buy shares at such high quotes. Yesterday, oil prices tumbled 5%. These factors set the stage for a deep downward correction.
Today Fitch made a statement that fueled investors’ worries. One of the three largest rating agencies predicts that the US Fed could set about tightening its monetary policy in early 2022, though the regulator has repeated a pledge to hold interest rates near zero until the end of 2023.
Yesterday, the Dow Jones index dropped 0.5% and the S&P500 sank 1.5%. The Dow Jones opened at near 32,870 points.
The US dollar index found solid support at near 91.50 with prospects for a further advance. Today the index is trading in a range of 91.50 to 92.50.
The Canadian dollar weakened against its American rival that comes as no surprise amid a slump in oil prices. Analysts foresee a further climb of the USD/CAD pair to 1.2400 – 1.2580. Meanwhile, WTI is trading lower at about 61 US dollars a barrel. Experts project WTI to trade in the corridor of 57.50 – 62.50 dollars.
On Friday, Bitcoin is trading at highs, though crypto bulls failed to push the price up to the milestone mark of 60,000 dollars a token.
The number one cryptocurrency is trading at 58,800 – 59,000 dollars in the late New York session. It is on track to pass the level of 60,000 dollars at the beginning of the next week. Institutional investors could encourage this advance because earlier they locked in profits and are ready to buy the crypto asset again. Crypto fans welcome the news that Morgan Stanley is planning to buy a stake in Bithumb, the leading Korean cryptocurrency exchange.
Major central banks are making efforts to impact on financial markets through policy decisions.
Yesterday, the Bank of England maintained the key policy rate at historic low of 0.1% and the bond-buying program at 895 billion pounds per month.
Besides, the Bank of Japan also put the key interest rate on hold at minus 0.1%.
Wall Street is unnerved despite the Fed’s determination to carry on with its accommodative policy. Yields of US Treasuries are soaring above the level of 1.7%. At present, the best-performing shares belong to the largest American banks such as JPMorgan, Citibank, Bank of America, and Goldman Sachs. Investors reckon that the banks will be able to earn from rising yields of Treasuries. Meanwhile, shares of hi-tech firms are trading under pressure.
Today, the Bank of Russia unexpectedly raised the key interest rate by 25 basis points to 4.5%. Moreover, the regulator does not rule out the possibility of further rate hikes at policy meetings to follow. The Bank of Russia stated that inflation is holding above the target level and inflation expectations are too high. Under the classic macroeconomic theory, a rate hike is expected to strengthen a national currency. Meanwhile, the ruble is extending weakness. A rate hike is negative for the stock market because investments in bonds get more lucrative, but investments in shares turn less attractive.

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