Markets Week Ahead: Dow Jones, Nasdaq, US Dollar, Gold, Treasuries, Central Bankers
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Global market sentiment recovered this past week, with equities charging higher in North America, Europe and the Asia-Pacific region. On Wall Street, the S&P 500, Dow Jones and tech-heavy Nasdaq Composite rose 4.65%, 3.89% and 6.01% respectively. The VIX market ‘fear gauge’ receded to its lowest in almost two months.
Despite the risk-on tone, the haven-linked US Dollar managed to hold its ground in some cases. It gained against the Swiss Franc, Euro and Japanese Yen, while losing to the Australian Dollar, New Zealand Dollar and British Pound. A softer-than-expected nonfarm payrolls report at the end of the week caused most of the Greenback’s decline as Friday concluded.
What will be key to watch ahead is the story of longer-term Treasury yields, which have been rising. The 30-year rate closed at its highest since February 20th, 2020. This, combined with a stabilizing Greenback, has been weighing on precious metal prices, such as gold and silver. US fiscal stimulus bets and rising inflation expectations down the road are likely contributing to this.
The week ahead is relatively quiet, with the Lunar New Year taking Chinese exchanges offline starting Thursday, opening the door to lower-than-usual liquidity conditions. The US will release its latest inflation figures on Wednesday, with University of Michigan consumer sentiment due on Friday. AUD/USD may see some volatility around consumer confidence data.
There will be speeches from central bank policymakers to watch out for. Fed Chair Jerome Powell, ECB Chief Christine Lagarde and BoC’s Deputy Governor Timothy Lane are on tap. In addition to weekly EIA inventory data, crude oil prices await the latest monthly market report from OPEC. What else are traders watching in the week ahead?
GBP rallies as BoE says no to negative rates , EUR/GBP bearish breakdown.
EUR/USD broke below 1.20 last week for the first time since December 1 last year and as traders pile in to US Dollars the pair looks destined to fall further.
Precious metals are struggling to hold their ground as uncertainty hedges are unwound.
An improved fundamental picture, positive earnings guidance and stimulus hopes appeared to have rejuvenated stock markets’ rally, but rising longer-dated yields and a stronger USD may cloud the outlook.
The US Dollar may continue to gain ground against its major counterparts in the short term, as a noticeable pickup in inflations fuels bets that the Federal Reserve will taper its bond purchasing scheme.
The price of oil trades to fresh yearly highs as the decline in crude inventories boosts the outlook for consumption while US output sits at its lowest level since 2018.
The growth-linked Australian Dollar lost some ground despite a rising S&P 500 as the US Dollar received a boost from rising Treasury yields. This dynamic remains important to watch ahead.
The Dollar surged 0.6% into the February open with the index now up more than 2.6% off the January low. Here are the levels that matter on the DXY technical charts.
Sterling continues its gentle move higher across a broad range of currencies, although US dollar strength is limiting GBP/USD gains.
Aussie is sitting on support, but as a new week rolls around – will it hold or fold?
It was a bad week for the Euro, but there may be some positive items yet as EUR/USD is working on a bullish engulfing bar to finish a fairly bearish week.
Volatility has seen the Dow Jones, Nasdaq 100 and DAX 30 bounce wildly between technical levels. Short of a break beneath longstanding resistance, however, the outlook remains constructive.
Gold price action stumbled -2% lower this past week as precious metals struggle to stay bid. Can gold bulls stage a relief bounce off nearby technical support or will the recent bearish trend persist?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
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