Markets Week Ahead: Dow Jones, US Dollar, Non-Farm Payrolls, Crude Oil, OPEC+
Financial markets recovered this past week in the aftermath of June’s Federal Reserve rate decision. On Wall Street, the Dow Jones, S&P 500 and tech-heavy Nasdaq Composite rose 3.44%, 2.74% and 2.35% respectively. Things were also looking rosy in Europe and the Asia Pacific region, where the DAX 30 and CSI 300 climbed 1.04% and 2.69% respectively.
Fed Chair Jerome Powell helped cool policy tapering woes, sending the US Dollar back lower after a healthy performance earlier in the month. Of the majors, the New Zealand Dollar, Australian Dollar and Canadian Dollar were some of the best-performing currencies against USD. Commodities rose too, WTI crude oil and gold prices gained 3.27% and 0.94% respectively.
Given the tone from the US central bank, and recent elevated CPI and PCE data, a key focus this week will likely be on the non-farm payrolls report. The nation is expected to add almost 700k jobs. Average hourly earnings are also expected to increase 3.6% y/y in June from 2.0% prior. A strong outcome in the latter could further bring forward Fed tapering bets.
The 100-year anniversary of the Chinese Communist Party is also coming up, with President Xi Jinping to deliver remarks on July 1st. Chinese manufacturing PMI will also cross the wires on June 30th. These will continue offering a gauge of global growth in the post-Covid recovery, of which the Aussie Dollar could be quite sensitive too.
Crude oil prices will be eyeing an OPEC+ ministerial meeting, where officials will be discussing output production. The commodity is sitting around the highest price since October 2018 amid surging demand as the global economy gradually opens up and recovers. Prospects of higher output could help tame the commodity. What else is in store for markets in the week ahead?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
The cryptocurrency is a sea of red again and has given back nearly all of this week’s mini-rebound. Weekend volatility could see more losses.
EUR/USD has been on a roller coaster ride over the past fortnight; its next move could be lower, triggered by the coming week’s Eurozone inflation numbers.
Gold is back within its April range as investor’s try and balance inflation data
Fresh data prints coming out of the US may prop up the Dollar as Non-Farm Payrolls (NFP) are expected to increase for the sixth consecutive month.
The possibility of Banxico embarking on an aggressive tightening cycle and positive risk sentiment should drive USD/MXN lower in the near term, with the 2021 low being the immediate focus.
The Australian Dollar recovered with the S&P 500 and Shanghai Composite. Was it another overreaction to the Fed? AUD/USD turns to RBA Governor Philip Lowe, Fedspeak and US NFPs next.
The Dow Jones might struggle to regain its footing as investors look to rotate out of value stocks and back into high-growth technology stocks. Meanwhile, the DAX 30 awaits inflation and employment data.
The Nasdaq 100 index saw a “Shooting Star” candlestick forming on the daily chart, hinting at a potential near-term pullback. The overall uptrend remains intact though.
USD/CAD retraced a big chunk of the Fed sparked rally; next week we may find out whether the pullback becomes a full reversal or not.
Sterling snapped a three-week losing streak but the recovery remains vulnerable into the monthly close. Here are the levels that matter on the GBP/USD weekly technical.
A rather clean and consistent range appeared in Gold prices this week after the massive sell-off that showed up in the first few weeks of June.
AUD/USD made a comeback this week and recaptured the 200-day Simple Moving Average, shifting optimism back to Aussie Dollar bulls.