Markets Week Ahead: Dow, Bitcoin, EUR/USD, Fed Update, Stimulus, Yields
Markets have been quite choppy over the last several trading sessions. This past week saw a broad recovery in risk trends with sentiment improving on the heels of simmering bond market volatility. The Dow Jones Industrial Average jumped 4% to a fresh record high and the Nasdaq rebounded 2% while the S&P 500-derived VIX Index, or fear-gauge, snapped sharply lower. Popular cryptocurrencies like Bitcoin and Ethereum extended toward their respective all-time highs.
Congress cementing President Biden’s $1.9-trillion covid aid package, which includes $1,400 stimulus checks set to be dished out as early as this weekend, likely contributed to investor optimism. Not to mention, the OECD upgraded its 2021 global GDP growth forecast by 1.4% thanks to a huge upward revision in US GDP to 6.5% from 3.2% projected last December.
EUR/USD price action gained ground as the Euro firmed in the wake of the ECB meeting and capitalized on a generally softer US Dollar. The Canadian Dollar was a top performer on the week with USD/CAD cratering 177-pips to its weakest level since early 2018 helped fueled by robust jobs data. Broader US Dollar downside was slightly offset by strength against its Japanese Yen peer with USD/JPY popping 66-pips as the yield on ten-year Treasuries pushed above 1.6% to a new pandemic high. As for major commodities, precious metals like gold and silver caught a relief bounce, though crude oil prices lost upward momentum.
Looking to the week ahead, our central bank calendar highlights upcoming announcements from the Federal Reserve, Bank of England, and Bank of Japan among others. The Fed meeting will likely be the main event seeing that FOMC officials are expected to release updated economic projections and could comment on rising Treasury yields.
Taking a glance at our economic calendar reveals additional high-impact event risk on deck such as the release of monthly US retail sales as well as inflation data out of Canada and the Eurozone. China is slated to release key economic indicators on Monday, 15 March at 02:00 GMT, which could also be noteworthy in light of resurfacing trade tensions. What else are traders watching out for in the week ahead?
XAU/USD price action caught a much-needed bid this past week as gold pushed higher thanks to help from a slightly softer US Dollar. Will the Fed meeting on deck spark another precious metal selloff?
A tepid US core CPI reading and smooth Treasury note auctions last week calmed longer-term yields, which alleviated pressure on tech sector. Will this trend be sustained?
GBP/USD trades in choppy fashion as US yields dictate the current state of play.
Last week’s meeting of ECB monetary policymakers failed to weaken Eurozone bond yields, and any further moves higher this week would likely result in corresponding gains for EUR/USD.
The New Zealand Dollar has regained lost ground against the US Dollar in recent days and remains poised to continue pushing higher. However, the upcoming FOMC rate decision may ultimately define the exchange rate’s near-term trajectory.
Fresh forecasts coming out of the Federal Reserve are likely to influence the US Dollar as Fed officials are slated to update the Summary of Economic Projections (SEP).
USD/MXN hits 5-month high as bond yields pick up pace.
The Dollar is trying to reassert itself, but has its work cut out in the days ahead if it’s to keep its footing.
The Dow Jones and DAX 30 have broken out to fresh all-time highs while the Nasdaq 100 continues to struggle with trendline resistance after its breakdown over the last few weeks.
The precious metal remains at risk of a further sell-off with little in the way of strong support ahead of the low $1,600s.
Crude oil prices have been on fire in 2021, and in the process of their run higher, have cleared significant technical resistance. Any setbacks – including this week’s sideways price action – should be viewed in this context.
Sterling may have snapped a two-week losing streak but GBP/USD remains on defense into the FOMC/BoE. Here are the levels that matter on the weekly technical chart.
A series of key technical levels offer potentially actionable trade levels across several Australian Dollar pairs. What are the key levels to watch out for in AUD/USD, AUD/CAD and AUD/JPY?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
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