Markets Week Ahead: Gold, US Dollar, Nasdaq 100, Treasury Yields, Jackson Hole, China
The US Dollar mostly outperformed its major counterparts this past week. Gold prices were particularly hit hard as Treasury yields on the longer-term spectrum soared. This was likely to due financial markets pricing in a higher terminal rate from the Federal Reserve amid still-solid economic data.
In fact, this dynamic also took its toll on equity markets which succumbed to volatility. Tech stocks were hit particularly badly with the Nasdaq 100 on course for the worst month since December, down over 7 percent this month so far. While the Dow Jones and S&P 500 also underperformed, they were not hit as hard.
A slowing China was another focus this week amid lackluster economic data which inherently caused the Yuan to depreciate further. In response, the People’s Bank of China had to step in to help cool the selloff. Meanwhile, Evergrande Group, a key local property giant, filed for U.S. bankruptcy amid a wobbly housing market.
Overall, this is leaving financial markets in a precarious state going into the new trading week. Key event risks from the US ahead include the Federal Reserve’s Jackson Hole Economic Policy Symposium where Chair Powell and ECB President Christine Lagarde will be speaking. What else will be in store for markets in the week ahead?
How Markets Performed – Week of 8/14
Sterling remains above 1.2700 despite ongoing US dollar strength, while EUR/GBP nears multi-week support. A central bank bonanza lies ahead next week at the Jackson Hole Symposium.
Crude Oil prices have snapped a seven-week winning streak with investors now focused on the clear possibility of reduced energy demand, rather than the certainty of tightening supply.
The Dollar Index (DXY) continued its impressive run as risk-off sentiment, upbeat data and hawkish Fed minutes provided support. Will Jerome Powell inject further bullish momentum at Jackson Hole?
--- 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.