Markets Week Ahead: Dow Jones, US Dollar, Australian Dollar, Crude Oil, OPEC+, NFPs
Bulls were in the front seat for financial markets this past week, with stock markets across the world rising. On Wall Street, the Nasdaq Composite, S&P 500 and Dow Jones gained about 2.8%, 1.5% and 0.9% respectively. In Europe, the FTSE 100 and Euro Stoxx 50 climbed 0.85% and 1.05% respectively. In the Asia-Pacific region, Japan’s Nikkei 225 rose 2.32% to end the week.
All eyes were on the Federal Reserve’s Jackson Hole Economic Policy Symposium. There, it seemed that the central bank disappointed those looking for more clear-cut tapering timeline cues. While Chair Jerome Powell said that it could be appropriate to begin the process this year, he still fretted about the labor market, where there is “much ground to cover” to hit maximum employment.
Treasury yields weakened alongside broad underperformance in the anti-risk US Dollar and similarly-behaving Japanese Yen. The sentiment-linked Australian and New Zealand Dollars mostly outperformed their G10 counterparts. Still, the 10-year rate remains higher than where it started last week, likely reflecting global growth optimism as the Pfizer vaccine was granted full FDA approval in the US.
Weakness in the US Dollar and improving market sentiment bolstered commodity prices. WTI crude oil prices soared almost 11% in the best week since June 2020. Gold gained about 2%. DCE iron ore and LME copper futures rose about 8.3% and 4.5% respectively. Will this cheery dynamic be sustained heading into September?
All eyes turn to August’s US non-farm payrolls. The nation may add 750k positions. Looking at the Citi Economic Surprise Index, US data is still tending to disappointment relative to expectations. Given how closely the Fed is watching the labor market, a softer print could further push back tapering timeline bets. China releases manufacturing PMI, Australia updates GDP and oil prices await another OPEC+ meeting. What else is in store for markets in the week ahead?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
The slew of US data prints on tap for the start of September are likely to sway the Dollar as the Federal Reserve retains an outcome-based approach for monetary policy.
Gold rose into the weekend after Fed Chair Powell offered no clear signal on tapering. XAU traders are shifting focus to next week’s non-farm payrolls print as geopolitical risks linger.
Powell inspired lift for EUR/USD, eyes on key US data.
Bitcoin continues to draw strength from the 200-day simple moving average and if this continues, higher prices may be seen in the near future.
The Pound Sterling shows little sign of a directional preference which is likely to persist as Powell reads from a similar script in Wyoming on Friday
The Fed’s dovish taper tone at the Jackson Hole Symposium is likely to depress US treasury rates and weigh on USD/MXN in the near term as traders seek to exploit higher yields in EMFX.
Oil, GameStop (GME) prices remain elevated as markets wait for Jerome Powell to speak at Jackson Hole
The Australian Dollar has grinded higher, but future direction will likely depend on commodity pricing, yield differentials and risk appetite.
Tech stocks extended higher into the record territory even though Fed Chair Jerome Powell prepared the markets for the Fed tapering. Interest rate hikes are likely to be far away, alleviating pressure on risk assets.
US Dollar plunged more than 0.8% after reversing from key resistance this week- risk for a deeper USD correction? The levels that matter on the DXY weekly chart.
Stocks remain well supported in the short-term as pullbacks offer renewed momentum to push higher
The AUD/USD chart is still trending lower but that is being put to the test; levels and lines to watch in the days ahead…
Brief dollar drop sent GBP/USD higher but the pair looks set to continue its sideways grind into the coming week
WTI crude oil prices saw the best week since June 2020, but the commodity remains tilted to the downside as it trades within the boundaries of a Descending Channel.
Canadian Dollar strengthens, buoyed by rising Oil prices and a weaker US Dollar