The most aggressive risk behavior in a few months is now observed, and the main markets are located at a turning point, beyond which the current explosive growth will either begin to subside or accelerate. But Forex robots have no problem dealing with the instability at the market.
This situation arose after the risk-appetite went up on Friday 12th before closing, supported by the latest lending data in China and Donald Trump's powerful political pressure on the Fed. The price activity last week reflected the fluctuations back and forth, which have been observed for many months now due to the fact that traders cannot decide what to do with the US dollar and with risky currencies. The risk taking environment is more favorable than ever. At the same time Forex robots show fairly constant stability in their work on the USD currency pairs as well as on JPY, EUR and AUD.
The AUDUSD pair last week changed direction every day from Tuesday to Friday and is now just below the 200-day moving average. At the same time, the American stock market is again less than 2% of the historical maximum, while the yield on long-term US Treasury bonds is at reversal levels: 10-year-olds are slightly higher than 2.50%, and 30-year-olds are just below 3.0%.
The JPY shows some more steady easing, especially since Friday morning, when lending data in China for March showed the strength of the stimulus measures used.
The main question now is how long the current rally can last if yields start to grow again - especially at the long end of the American curve. But aggressive increases in US bond yields in 2018 preceded serious pullbacks. Continued growth in returns, even with increased risk appetite, would mean a steady risk rally under an explosive scenario, based on hopes that China’s stimulus measures and the transition of central banks to more “dovish” positions will support the growth of financial markets, although this will require confirmation over time.
However, it is too early to talk about the growth of profitability, as now only a technical turnaround is seen in the regime of falling interest rates in the event that the yield growth of 10-year American paper continues. But this is still a noticeable stumbling block for the market and it is hardly a coincidence that the main US stock indices are now only two percent of the historical highs of last autumn - and this is just before the reporting season. Another immediate risk is that American consumers will be disappointed with tax deductions. The seasonal decline in the stock market is also close.