Markets Week Ahead: Nasdaq 100, US Dollar, Gold, Crude Oil, Fed Ends SLR Exemption, NFPs
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Market sentiment was mostly upbeat this past week with some exceptions. On Wall Street, the Dow Jones, S&P 500 and tech-heavy Nasdaq Composite closed +1.36%, +1.57% and -0.58% respectively. In Europe, the DAX 30 and FTSE 100 rose 0.88% and 0.77% respectively. Meanwhile in the Asia-Pacific region, the Nikkei 225 and Hang Seng weakened over 2%.
Still, there were some bumps along the way as the haven-linked US Dollar appreciated. Chinese equities flirted with correction territory. Meanwhile, solid demand for Treasuries at government auctions this past week stabilized longer-term rates. The 10-year yield fell after 7 consecutive weeks of gains. Albeit, it recovered a good chunk of losses into the weekend.
A stronger Dollar and weaker bond yields likely resulted in a fairly quiet week for precious metals as gold consolidated. Crude oil prices also saw sideways price action. A blockage at Suez Canal fueled supply disruption woes. Simultaneously, a reintroduction of lockdowns in parts of Europe to tame rising Covid cases dented the outlook for fuel demand.
Having said that, on Monday England is expected to end stay-at-home orders and could offer some lift to market sentiment. Meanwhile, the Federal Reserve is not anticipated to extend emergency SLR exemptions, opening the door to less demand for Treasuries. That may in-turn offer yields some upside momentum.
Another key event to watch out for is the US non-farm payrolls report on Friday. A solid month could lift bond yields and further boost the rotation trade out of growth and into value stocks. Most trading exchanges will however be closed for the Good Friday holiday, opening the door to illiquid market conditions. Crude oil prices are eyeing an OPEC+ meeting. What else is in store ahead?
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Gold price action was directionless last week as the precious metal was caught between tempered US Treasury yields and a surging US Dollar. Should the two forces continue, XAU/USD might stagnate.
The update to the US Non-Farm Payrolls (NFP) report may keep the US Dollar afloat as employment is expected to increase for the third consecutive month.
Money markets are pricing in two possible rate hikes in 2021 as Mexico sees soaring inflation.
EUR/USD is sure to bounce back at some time but for now it’s hard to see anything but further losses as the EU struggles with a third wave of Covid-19 infections and more lockdowns.
Reflation optimism and vaccine rollouts led to a rotation from tech into cyclical sectors, boosting the Dow Jones Industrial Average while pulling down the tech-heavy Nasdaq 100. Will this trend be sustained?
The British Pound has had a stellar start to 2021 however, although the currency’s long-term technical outlook remains bullish, fading momentum could lead to a period of consolidation in the week ahead. Key GBP/USD, GBP/JPY and EUR/GBP levels to watch.
An outside-week reversal to fresh yearly highs has USD/JPY bulls threatening major uptrend resistance. These are the levels that matter on the weekly technical chart.
The Australian Dollar faces a variety of technical setups in the week ahead against the US Dollar, Canadian Dollar and Japanese Yen.
Stocks are trying to remain stable, but keep an eye on the NDX as it sits in a precarious spot and could sink the broader market.
The US dollar continues to probe multi-month highs and despite the greenback looking overbought, the path of least resistance is higher still.
Gold prices went from extreme overbought last August to extreme oversold this March. But what’s around the next corner?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
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March 29, 2021 at 05:13AM