Markets Week Ahead: Nasdaq 100, US Dollar, GBP, Brexit, Fed, Treasury, Thanksgiving
Global equity markets struggled to accumulate meaningful upside momentum despite what has been positive Covid vaccine news from Pfizer and Moderna. The former formally filed its vaccine for emergency use authorization with the FDA. Simultaneously, coronavirus cases in the US climbed, hitting new records alongside hospitalization rates.
On Wall Street, the tech-heavy Nasdaq Composite outperformed, but gains were very modest this past week. The US Dollar lost ground to most major currencies as longer-dated Treasury yields declined. The latter speaks to fading confidence in the medium-term growth outlook. Crude oil prices outperformed on rising bets that OPEC+ will delay raising output in 2021.
Investors were also thrown off guard by a squabble between the Treasury and Federal Reserve over unused funds from emergency lending facilities established from the CARES Act. The former wants the latter to return some of them back to the department. Treasury Secretary Steven Mnuchin wants these redirected. This is as Congress struggles to pass another fiscal package amid gridlock.
Meanwhile, the British Pound cautiously rose as the EU and UK seemed to inch closer to a Brexit deal. Reports crossed the wires that an agreement could perhaps be reached within 2 weeks. Ahead, investors are eyeing FOMC minutes with expectations for more asset purchases brewing before December’s monetary policy announcement.
ECB minutes are also on tap for the Euro, as well as German and Euro-Area consumer confidence. The US will release Conference Board Consumer Confidence, which may decline given the recent surge in Covid cases. Expect lower-than-usual liquidity conditions with US markets offline on Thursday for the Thanksgiving holiday. What else is in store for markets ahead?
Gold prices fell for a second consecutive week as inflation expectations eased after a U.S. political shift. A dispute between the Federal Reserve and Treasury is boosting gold prices, will momentum pickup?
The EU and UK continue their post-Brexit trade talks, stressing that a deal is within reach, but neither side is prepared to move to get a deal over the line. Again.
With the markets focused on coronavirus vaccines, it was easy to miss news last week that Poland and Hungary have blocked the EU’s recovery fund; another potential negative for the Euro.
The US Dollar may rise as minutes from November’s FOMC meeting cement the Fed in wait-and-see mode, cooling risk appetite even as the yield outlook turns more supportive.
The S&P 500 index may pull back further due to a lack of stimulus clarity amid rapidly climbing Covid-19 cases. IMF painted an uneven recovery outlook, with more policy action needed.
Crude oil price volatility looks set to linger as outlook for the commodity closely tied to GDP growth remains clouded by near-term downside risks undermining COVID-19 vaccine optimism.
USD/MXN looks set to renew downside momentum in a new attempt to break a critical support level
Cable continues to rise within the confines of a channel, but has a stiff test ahead with long-term resistance looming.
After surging to fresh all-time highs earlier this month, stocks have slipped into consolidation mode as they bounce between technical levels ahead of the next major moves. Here are the levels to watch.
Gold challenging range lows amid the tug of war between vaccine optimism and virus concerns.
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.