Nasdaq 100, Russell 2000, Gold, USD, Stimulus, Treasury Yields

Despite civil unrest on Capitol Hill last week, US and global stocks ended on a positive note to start the first full week of the new year. The Russell 2000, an index measuring the performance of predominantly small-cap US companies, outperformed the highly technological Nasdaq 100, closely followed by the S&P 500 and the Dow Jones.

What was rather interesting was the story of fixed income assets. Yields on longer-term Treasuries have skyrocketed, with 10- and 30-year rates rising the most since August. Financial markets greeted Democratic senators by winning both polls in Georgia. This opened the door for a larger fiscal stimulus, providing much needed support for an economy recovering from the coronavirus.

The disappointing December non-farm payroll report supported the case for increased support. Due to rising government bond yields, gold prices could be left vulnerable after the worst week since late November. Meanwhile, crude oil prices could benefit, also supported by an unexpected cut in production from Saudi Arabia after the OPEC meeting last week.

The US dollar could also take a break as rising local bond yields make it a more attractive investment, but the extent to which it could benefit is unclear given the Fed’s still accommodative stance. Further equity gains would likely continue to play against the safe haven greenback, with sentiment-linked Australian and New Zealand dollars poised to take advantage.

Stricter lockdowns remain a risk for markets amid the new, more contagious strain of Covid-19. Markets will be eyeing a plethora of speeches from Federal Reserve Chairs such as Eric Rosengren and Raphael Bostic. The director of the ECB, Christine Lagarde, is also on duty. Towards the end of the week, pay attention to US retail sales and sentiment. What else do we expect for the markets to come?

FUNDAMENTAL forecasts:

Sterling (GBP) Weekly Outlook: Covid-19 Vaccination Program Underpins Sterling

Looking ahead, the pound will continue to gain strength from an acceleration of the UK vaccination program, despite the rising number of infections.

Aussie dollar outlook: rising commodity prices will push the AUD higher

Australia’s success in suppressing the novel coronavirus and soaring commodity prices may continue to support the cycle-sensitive AUD in the months to come.

Mexican Peso Forecast: USD / MXN Balances in Support as Covid-19 Cases Rise in Mexico

The strong bearish trend in USD / MXN has stalled in recent weeks as bearish momentum weakens.

Crude Oil Prices Eyes On OPEC Prospects After Saudi Production Cut

Crude oil prices could extend gains after Saudi Arabia unexpectedly slashed production ahead of OPEC’s monthly outlook report. US fiscal stimulus bets may also support WTI.

Will the S&P 500 extend its record rally on reflation hopes?

The seemingly unstoppable rally in US stocks may have more leeway before the time is right for a correction. Reflation trading appears to be gaining ground, but exaggerated valuations may signal the risk ahead.

Euro forecasts: EUR / USD optimistic outlook on sunny market climate

Confidence among traders was bolstered by the Senate takeover by US Democrats, which suggests further outflows from the safe US dollar into risky currencies such as the euro.

Gold Price Outlook Muddled By Soaring US Treasury Yields

The price of gold falls to a new weekly low ($ 1,834), with bullion weakness largely coinciding with the recent surge in yields on US Treasuries.

TECHNICAL forecasts:

Euro Weekly Technical Outlook: EUR / USD Channel Structure at a Glance

EUR / USD is on the rise, but momentum has diminished; always giving it the benefit of the doubt, but keep a watchful eye on the channel.

Pound Forecasts: Sterling Rally Wobbles To Trend Resistance

The British pound broke a three-week winning streak, with the rally in sterling stalling at technical resistance. Here are the levels that count on the weekly GBP / USD chart.

Gold Price Forecast: (XAU) Gold pegs as Bitcoin pulls on the moon

Gold bulls were just anchored this week as Bitcoin soared to the moon. Do we have a new safe haven taking the crown, or just a break in a larger cycle?

Crude oil technical outlook: oil surges on Saudi surprise – key levels to watch

Good start to 2021 as crude oil soars on Saudi surprise and market meltdown.

Dow Jones, Nasdaq 100, FTSE 100 Forecast for the coming week

Stocks hit new highs last week as they slipped into overbought territory after more than two months of essentially continuous gains. Can they keep growing taller despite the heat?

WEEKLY PERFORMANCE OF THE US DOLLAR AGAINST CURRENCY AND GOLD