Nasdaq 100, gold, US dollar, Fed, GDP, euro, Australian dollar, inflation data
Global market sentiment continued to improve last week. On Wall Street, the Nasdaq 100, S&P 500 and Dow Jones rose 3.49%, 2.54% and 1.98%, respectively. In Europe, the DAX 40 and FTSE 100 indices rose 2.49% and 1.04%, respectively. This is where the Australian ASX 200 Index is up 1.95% and the Japanese Nikkei 225 Index is up by 2.59%.
An improvement in risk appetite has weighed on the safe-haven US dollar, with the DXY dollar index down 1.31% last week. This was the worst performance since late May. However, the anti-risk Japanese yen outperformed. USD/JPY is down 1.71%, the highest level since June 2020. The strength of the Japanese yen is likely due to external factors.
Treasury yields fell across the board as markets boosted the Fed’s cautious monetary policy outlook. Now, markets are back to pricing in two cuts in 2023, signaling the Fed’s pivot. This is despite the headline inflation rate in the US at 9.1% on an annual basis. Estimates of US real GDP for 2023 have declined, which could be a sign that markets are seeing the Fed succumb to recession fears.
Next week, we might get a better idea of who’s taking the lead. A hawkish Fed could easily dispel rising pessimistic estimates, bring volatility back into stock markets and potentially benefit the US dollar. Outside of the central bank, the US will also release GDP and personal consumption expenditures data. The latter is the central bank’s preferred measure of inflation.
Gold prices have performed well over the past week, likely due to the weakness of the US dollar and Treasury prices. But given the busy week ahead, the volatility of XAU/USD may still be ripe. Crude oil prices have performed very poorly, likely due to the fading of global growth prospects. Earnings season is still in effect, and more upbeat than expected results may have contributed to the market’s upbeat tone.
Elsewhere, Australia will release its second-quarter inflation rate. 6.3% year-over-year print was seen, up from 5.1% previously. This likely explains the increasingly aggressive Reserve Bank of Australia. Will the Australian dollar benefit? Inflation data for Germany and the Eurozone is also available for the Euro. What is in store for the markets next week?
The performance of the US dollar against. coins and gold
Euro (EUR/USD) forecast – a week full of high-risk events
The EUR/USD is heading towards a week full of important releases and events, from both sides of the pair, which will increase volatility.
AUD/USD Weekly Forecast: Resilient AUD supported by commodities despite missing PMI, Fed in focus
Last week’s strong close set the AUD/USD pair for the upcoming data-packed week with the Fed in focus.
Cryptocurrency Predictions: BTC and ETH Lead Rally Announced with “Merge” Date Announced; A dangerous event is coming
Too Early to Call Crypto Winter… Is Ethereum “Merge” Leading the Rally?
Crude Oil Basic Outlook: Demand destruction outweighs supply fears
West Texas Intermediate crude prices declined somewhat significantly as recession fears increased although supply remained very tight. A Fed rate hike next week could add to that.
Weekly Stock Market Outlook: S&P 500 & DAX 40
The bear market rally has run out of steam as US data slows. The Fed expected to raise another 75 basis points
GBP/USD rebound subject to Fed forward guidance
The Fed rate decision could undermine the recent bounce in GBP/USD if the central bank steps up efforts to combat inflation.
USD/JPY Forecast: Will the Japanese Yen Continue to Weak Against the US Dollar?
The USD/JPY has risen sharply this year, but may soon begin to correct lower amid signs that Fed tightening has peaked amid a rapid slowdown in US economic activity.
Gold Price Forecast: XAU/USD reversal may be premature. Eyes on the Fed, GDP and Personal Expenditures
Gold prices rose last week, but the markets may be well on their way. The hawkish Fed data, US GDP and PCE expenditures could influence XAU/USD next week.
US Dollar Technical Outlook: US Dollar Exhaustion – DXY Leads the Fed
The US dollar snapped a three-week winning streak as DXY reversed more than 1.5% of technical resistance. The key levels on the technical weekly chart are heading towards the FOMC.
Gold and Silver Technical Outlook: Charts suggest more losses ahead for XAU and XAG
Gold and silver prices broke their tracks for several weeks, but prices struggled to hold on to gains. XAU and XAG charts indicate that the path of least resistance is still skewed to the downside.
Standard & Poor’s 500, Nasdaq 100, Dow Jones forecast for next week
It was another week of stock strength. The Federal Reserve is waiting in the wings. Are they close to collapse in the face of declining economic data?