Global market sentiment was mixed last week. Strong gains were seen in financial world As the nasdaq 100 and Dow Jones gained about 2.3% and 0.33% respectively. Stocks in Europe were mixed, with the FTSE100 picking up 1% like the DAX40 decreased 0.74%. In Asia, the Nikkei 225 it roared 5.6% higher as the Hang Seng was relatively flat.
Surprisingly, sentiment improved despite a more aggressive Federal Reserve. Chairman Jerome Powell opened the door for a 50 basis point increase in meetings if needed. He also downplayed concerns about a recession in 2023. American dollar was mixed, surpassing the Euro and british pound. Sentiment-linked Australian and New Zealand dollars outperformed.
It was a lousy week for fighting risk japanese yen. Rising Treasury yields continue to erode the JPY’s appeal in a world where the Bank of Japan remains dovish compared to its major peers. Raw material prices rose. WTI Raw oil gained 7.7% as gold rose 1.7%. Other metals, such as aluminum and iron ore, gained 7% and 4.7%, respectively.
Economic event risk returns in the coming week, with the US agenda busy. Tier one event risks from that part of the world include the Fed’s preferred gauge of inflation and nonfarm payrolls. Traders will watch closely as price pressures continue to work their way into the economy, opening the door for a more aggressive central bank.
Outside of the world’s largest economy, China is to release the manufacturing PMI for March. Concerns have grown about a slowdown in China, which could have key consequences for global growth. Inflation data from the euro zone will also cross the wires, perhaps leaving the European Central Bank in a difficult situation, having to choose between economic fallout from Ukraine or mounting price pressures. What else is in store for the markets in the coming week?
WEEKLY PERFORMANCE OF THE US DOLLAR VERSUS FOREIGN EXCHANGE AND GOLD
AUD/USD is looking at economic data printed this week after the currency rallied amid higher commodity prices and a rebound in market sentiment. Will the data impress enough to drive the increase RBA rate bets up?
The latest look at inflation data from Germany and the euro zone next week may be make or break for the single currency as it struggles to hold its own against the US dollar.
Data prints out of the US may fuel the recent advance in gold prices as the Fed’s preferred gauge for inflation is expected to rise for the sixth month in a row.
The Nasdaq 100 saw its best 2-week rise since the dot-com crash of the early 2000s, the S&P 500 and Dow Jones followed. The road ahead remains difficult with US PCE and Non-Farm Payroll data in the spotlight.
US dollar/Canadian dollar is on the move after breaking below support, the next big level to watch is the yearly low.
The DXY index appears to be developing a double bottom formation, which is sometimes considered a bullish continuation pattern. The confirmation could set the stage for the next leg higher.
The rather unusual break in gold at the end of the week came as a surprise after invalidating the bearish pennant, however, gold is facing a severe resistance zone.
It was a strong week for equities, even with a set of risks piling up on the horizon. Are the bears gone here or are we gearing up for something bigger?