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The Dow Jones, S&P 500 and Nasdaq 100 ended a rosy week, up around 0.75%, 0.64% and 0.14% respectively. This given that the 3 benchmark Wall Street stock indexes erased significant bearish spreads at the start of the week. Most regional stock indices in Europe also ended higher, with Asia-Pacific markets lagging slightly.
Evergrande’s contagion issues were ruled out when the heavily indebted company made a coupon payment ashore. The offshore bondholders apparently did not receive any payments by the end of the trading week. The situation remains fluid as China has asked local governments to prepare for a default. The risk is that a slowdown in the growth of the world’s second-largest economy reverberates outwards.
Markets appeared to focus more on the Federal Reserve as President Jerome Powell hinted he would complete the reduction in asset purchases by the middle of next year. The 10-year Treasury yield hit its highest level since early March amid the central bank’s bullish outlook on the economy. A rise in initial bond yields outperformed the US dollar against the Japanese yen. Anti-fiat gold prices have weakened.
The Canadian dollar also performed well, perhaps supported by improving market sentiment as crude oil prices continued to recover. Oil is a key Canadian export, which could have implications for inflation and monetary policy. Meanwhile, Bitcoin suffered when China declared all cryptocurrency transactions illegal, extending the crackdown to parts of the economy.
There will be a plethora of speeches from central banks in the coming week. The most notable will come from Capitol Hill, where Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen will testify before Congress. Given mounting inflationary pressures, policymakers might focus their attention on this front, perhaps revealing additional insight from the central bank’s perspective on the matter.
The Fed chairmen of the New York, Atlanta and St. Louis branches will also speak on behalf of US dollar traders. ECB President Christine Lagarde and BoE Governor Andrew Bailey are also tuned in to those watching EUR / USD and GBP / USD respectively. The next round of US PCE data is due later in the week, which is the Fed’s preferred inflation indicator. This could have a significant impact on monetary policy bets. What else is in store for the markets in the coming week?
WEEKLY PERFORMANCE OF THE US DOLLAR AGAINST CURRENCY AND GOLD
Fundamental forecasts:
US dollar performance after FOMC relies on a wealth of US data
The update of the US Consumer Price Index (CPI) is likely to influence the US dollar during the Federal Reserve’s blackout period as the central bank prepares for a transient rise in the inflation.
S&P 500 and FTSE 100 forecasts for the coming week
Short-term uncertainties to keep the pressure on the equity markets.
Australian Dollar Outlook: China, Energy and Yields at Stake. What will drive the AUD / USD?
The Australian dollar continues to be caught in the crosswind of external factors as risk appetite fluctuates. Can AUD / USD find a stronger footing?
Euro forecast: Limited EUR / USD rebound could follow German election results
This weekend’s German Federal Election results will likely dominate Euro sentiment early in the coming week, but after a possible EUR / USD rebound, they will have little long-term impact.
Cryptocurrencies Criticized by China Ban, Twitter (TWTR) Allows Bitcoin (BTC) Tipping
Bitcoin (BTC) started the day in the limelight on Twitter news before China’s latest crypto ban took the market down.
Crude oil could rise as the growth of Covid cases slows. WTI considers prospects for OPEC, Evergrande
Crude oil prices could rise as global growth in Covid cases continues to slow, raising demand expectations. All eyes are on OPEC’s annual report on the world’s oil outlook. The situation of Evergrande in China remains fluid.
Fundamental Gold Forecast: XAU Eyes PCE After US Dollar, Treasury Yields Weigh Price
Gold prices fell after a hawkish FOMC statement pushed yields higher over the weekend, hurting the non-interest bearing asset. PCE numbers are the focus of concerns for gold traders this week.
Technical forecasts:
S&P 500, DAX 40, FTSE 100, technical forecasts for the coming week
Global equities are rebounding from the recent pullback as major resistance levels emerge.
US Dollar Technical Forecasts: USD Lacks Conviction As Resistance Approaches
The USD could still rebound a bit from here, but it has resistance not too far that it will need to overcome if it is to expand further.
Gold weekly technical forecast: bearish price action indicates greater weakness
Gold could take further short-term losses due to rising US Treasury yields and a weak technical picture for price action.
Pound forecast: GBP / USD breakout looming as cable contracts
The British Pound continues to contract in trend extremes and the focus is on an impending breakout in the coming weeks. Here are the levels that count on the weekly GBP / USD chart.
Japanese yen technical forecasts: USD / JPY, EUR / JPY, GBP / JPY
The Japanese yen remains the center of attention with potential strength on risk aversion themes as well as weakness on themes around higher rates.
Price Prediction in Canadian Dollars: USD / CAD, Evergrande and Oil – Key Loonie Levels
The Canadian dollar rebounded temporarily. Evergrande, commodity prices and US economic data remain key catalysts for USD / CAD in the coming week.
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