Markets Week Ahead: Dow Jones, US Dollar, Crude Oil, Fed, Treasuries, NZD/USD, RBNZ
Market sentiment was a mixed bag this past week. On Wall Street, the Dow Jones climbed 0.2 percent over the past 5 trading sessions. But, the tech-heavy Nasdaq Composite fared worse, shrinking 1.08%. Things were slightly rosier in Europe and within the Asia-Pacific region, where the FTSE 100 and Nikkei 225 climbed 0.52% and 1.69% respectively.
Taking a look at foreign exchange markets, the sentiment-linked Australian Dollar and New Zealand Dollar were some of the best-performing G10 currencies. The anti-risk Japanese Yen weakened broadly. However, the similarly-behaving US Dollar fared better, seeing a mixed performance against its major counterparts.
Looking at commodities, crude oil prices were a notable standout. Initially, WTI climbed as much as 4.25% before turning lower, ending the week 1.14% lower. As the state of Texas gradually saw power recover following extreme cold climate, oil wells opened back up, restoring much-needed supply back into the market, pressuring energy prices.
In the week ahead, investors will likely continue watching developments in longer-term Treasury yields. Rising expectations of a gradual economic recovery from Covid-19 have been pushing those higher, alongside inflation estimates. As returns in fixed-income assets increase, it may draw investors slowly away from riskier and non-yielding ones. The latter include stocks and gold.
Key economic event risk ahead include testimony and speak from Fed Chair Jerome Powell, who may receive questions on developments in bond markets. The New Zealand Dollar is eyeing the RBNZ interest rate announcement and press conference. German consumer confidence may inspire Euro volatility. What else is in store for markets in the week ahead?
Fed Chair Jerome Powell will head to Capitol Hill for two days of testimony to deliver the semi-annual Monetary Policy Report.
USD/MXN breaks its downtrend as energy shortages from the US cause concern for the Mexican economy.
Rising real yields are pressuring the yellow metal and the inflation-adjusted price of gold is already near historical highs. Where next for XAU/USD?
Equity markets stumbled slightly last week but there are signs risk appetite lurks beneath the surface as corporations begin embracing cryptocurrency which has provided a boost to Bitcoin.
The Australian Dollar resumed its uptrend as traders betted on a gradual economic recovery from the coronavirus. Will Fed Chair Jerome Powell be asked about rising Treasury yields?
Gold is weak right now and could continue to be in the near-term; watch support for further cues.
The US Dollar looks set to continue losing ground against the Australian Dollar, British Pound and Euro in the coming weeks. Key levels for AUD/USD, DXY, EUR/USD, GBP/USD.
The Nasdaq 100 index likely entered a technical correction after hitting the 161.8% Fibonacci extension resistance. The overall trend remains bullish-biased however, with prices remaining within an “Ascending Channel”.
Oil prices surged more than 85% off the November low with the rally now testing resistance at yearly highs. Here are the levels that matter on the WTI technical chart.
EUR/USD appears to have reversed course ahead of the February low (1.1952) as it breaks out of the descending channel from earlier this year.
Sterling is finishing the week in strong fashion, breaking above 1.4000 against the US dollar and hitting a fresh near one-year low against the Euro.
It was a week of strength for the Aussie, as AUD set fresh highs against all of the US Dollar, the Japanese Yen and the Euro.
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.