Markets Week Ahead: US Dollar, Euro, AUD/USD, S&P 500, Fed Symposium, RNC
This past week, the US Dollar saw some strength against its major peers as it outperformed the Euro, Australian Dollar and New Zealand Dollar. EUR/USD particularly sold off as disappointing Eurozone PMIs crossed the wires into the end of the week. Meanwhile, coronavirus cases in Germany continued to rise.
Global market sentiment was somewhat mixed, the Dow Jones Industrial Average trailed the tech-heavy Nasdaq Composite. Equities and anti-fiat gold prices temporarily sold off as FOMC minutes poured cold water on yield curve control (YCC) expectations. At the same time, the largest weekly gain in the Fed’s balance sheet since early June pushed its total asset holdings above US$7 trillion.
Financial markets are eyeing a couple of event risk in the week ahead. The Federal Reserve will be hosting the annual Economic Policy Symposium which will be live streamed this year. Similar commentary that echoes the FOMC minutes about the outlook for growth and YCC could risk denting market mood, perhaps boosting the anti-risk US Dollar and Japanese Yen.
The Republican National Convention could also stir volatility if President Donald Trump focuses on foreign policy. US Conference Board Consumer Confidence will also be closely watched, a rosy outcome could boost the S&P 500. The Canadian Dollar will be eyeing local GDP data. What else are traders looking out for in the week ahead?
Selling pressure in the US Dollar may swell if commentary from officials at the highly-watched Jackson Hole symposium discount haven-linked assets and amplify risk appetite.
The Euro’s rally versus its major peers has been fading since the EU Summit deal. Attention is turning to next month’s ECB meeting. Will rosy European PMIs rekindle EUR/USD’s rise?
Current market conditions may keep the price of gold afloat as the FOMC appears to be on track to retain the current policy at the next rate decision on September 16.
UK-EU trade talks remain at an impasse. Chair Powell Jackson Hole speech the main focus.
Big technology names like Apple and Amazon continue to drag the Nasdaq 100 higher while bolstering the Dow Jones, but equity strength is very targeted. Still, summer conditions may ward off volatility.
The Japanese Yen may stage a short-term recovery in the coming weeks if escalating geopolitical tensions stoke a resurgence of market volatility.
Long positioning has thinned out in recent weeks, suggesting that the recent triangle consolidation in context of the uptrend may be pointing to higher gold prices.
The S&P 500 Index is facing an immediate resistance level at 3,390 – the all-time high. Failing to break above it will likely lead to further consolidation at around 3,200.
USD/MXN trades above the descending trendline as the US Dollar recovers some bid support
The US dollar (DXY) has turned higher over the latter half of the week and maybe looking at further gains as US dollar bears run out of short-term sell signals.
Crude oil has been struggling to rise for weeks, but has yet to trade off either; big resistance via multiple sources stands in the way, but price pattern may resolve soon.
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
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