Markets Week Ahead: British Pound, Euro, Gold, US Dollar, CPI and GDP Data
The US Dollar managed to outperform its major counterparts this past week despite a weak finish on Friday. That followed the nonfarm payrolls report where the headline rate of jobs growth slightly missed expectations. But, a lower unemployment rate and still-strong average hourly earnings meant that the Federal Reserve still has much work to do.
Gold prices, while gaining after the jobs report, still finished the week lower amid a surge in longer-term Treasury yields. The British Pound remained pressured despite a rate hike from the Bank of England. Meanwhile, a deterioration in market sentiment meant that the pro-risk Australian and New Zealand Dollars underperformed.
Of course, the weakness in AUD/USD was amplified by last week’s RBA interest rate decision. Focusing on stock markets, it was the worst week for the S&P 500 since early March as the index fell almost 2.4 percent. This might have been driven by the rise in longer-term Treasury yields relative to near-term rates. That reflects a tighter Federal Reserve for longer.
In terms of what to expect in the week ahead, all eyes turn to US inflation data on Thursday. A cautious pickup in the headline CPI rate is expected, which is not terribly great news for the Fed. Meanwhile, underlying core inflation is seen slowing cautiously. Meanwhile, the UK will release the latest GDP figures. What else is in store for financial markets in the week ahead?
How Markets Performed – Week of 7/31
The British Pound is marginally lower against both the US dollar and the Euro on the week after the latest BoE policy decision saw the terminal Bank rate outlook trimmed.
Yen enjoyed a mixed week against its G7 counterparts but faced renewed pressure as the initial bounce following a tweak of the YCC policy wore off. More losses in store for the Yen?
U.S. inflation data's momentum is expected to play a significant role in shaping the outlook for gold and silver prices in the short term by influencing the Fed's monetary policy roadmap.
--- Article Body Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
--- Individual Articles Composed by DailyFX Team Members
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.