Markets Week Ahead: Euro, ECB, US Dollar, Gold, Treasuries, US CPI, AUD/USD, Jobs Data
The US Dollar absolutely crushed it against its major counterparts this past week. In fact, the Euro confirmed its 8th weekly loss against the Greenback, matching an identical losing streak back in 2014. A 9th disappointment would mean the longest monthly losing streak since 1997! But, the Chinese Yuan took the cake in terms of being one of the worst performers.
Financial market sentiment also deteriorated, with the Nasdaq Composite, S&P 500 and Dow Jones weakening -1.95%, -1.11% and -0.42% last week, respectively. Things were not looking much better across the Atlantic, with the DAX 40 and Euro Stoxx 50 falling -0.63% and -1.06%, respectively. Japan’s Nikkei 225 weakened -0.32% while Australia’s ASX 200 sank -1.67%.
A key contributor to the cautious pessimism likely stemmed from the US Treasury market. The 10-year yield gained 2.08%, bringing medium-term rates closer to the August high following a dip a few weeks ago.
There is a slew of event risk in the coming week. On Wednesday, all eyes turn to the next US inflation report. A mixed bag could lay ahead for the Federal Reserve. While core inflation is seen weakening to 4.3% y/y from 4.7% in July, the headline rate is estimated to rise from 3.2% to 3.6%, likely owing to the rise in crude oil prices of late.
Outside of the United States, the week starts off with United Kingdom employment data for British Pound traders, followed by GDP figures later. Meanwhile, AUD/USD will be tuning in for Australian employment data on Thursday. Then, EUR/USD will be eyeing the next ECB rate decision. What else is in store for markets in the week ahead?
How Markets Performed – Week of 9/4
After a quiet few days for data and events, next week the calendar has a few high importance releases that will shift British Pound pairs.
The Australian Dollar is struggling to get off the matt with rates on hold and the global economic outlook under question. Treasury yields are rising again, lifting the US Dollar.
USD/JPY is approaching intervention territory as the pair heads towards the 150 mark. Upcoming US CPI is likely to provide short-term directional guidance this week.
An outside chance of a hike from the ECB presents an opportunity to halt EUR/USD selloff. UK GDP and jobs data could reinforce Governor Bailey’s terminal rate reference
After an early jump, crude oil prices are on course for a 4th monthly. While bearish reversal signals brew, the broader trend remains firmly bullish. What are key levels to watch next?
The upcoming August U.S. inflation report will play a crucial role in shaping financial markets, determining the trajectory of Treasury yields and the U.S. dollar in the near term.
--- 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.