Markets Week Ahead: Dow Jones, US Dollar, Yen, Crude Oil, Bitcoin Nears Record High,
Global market sentiment remained rosy this past week. On Wall Street, the Dow Jones, S&P 500 and Nasdaq Composite climbed about 1.5%, 1.7% and 2.1% respectively. European equities also shined, with the FTSE 100 and DAX closing 2.69% and 1.95% respectively. In Asia, the Hang Seng outperformed, rising 5.69%. Japan’s Nikkei 225 increased 3.64%.
With the cheery mood, haven-linked currencies underperformed. These included the US Dollar and Japanese Yen. Rising Treasury yields meant that USD/JPY touched its highest since late 2018. The sentiment-linked Australian and New Zealand Dollars shined. Taking a look at commodities, crude oil prices continued gaining, with WTI prices touching the highest since October 2014.
The surge in oil continues to reflect a global supply crunch. China has resorted to releasing Australian coal from storage after an unofficial ban on imports amid geopolitical tensions. Meanwhile, solid corporate earnings thus far have likely been bolstering sentiment. The US announced it will open international travel for vaccinated people on November 8th.
Front-end bond yields are on the rise, especially in the United States. FOMC minutes and CPI data this past week highlighted rising shelter costs, which could remain sticky amid supply shortages with elevated construction and labor costs. Data on this front will cross the wires this week. Rising returns on safer bond yields may continue slowly undermining riskier assets like stocks.
The week starts off with New Zealand CPI data and Chinese third-quarter GDP. Given that the RBNZ is probably the most hawkish developed central bank, NZD/USD could see some volatility. Being the world’s second-largest economy, a slowdown in China risks reverberating outwards, especially following issues in its real estate market. Bitcoin nears its record high after the SEC paved a path for futures trading of the cryptocurrency. What else is in store for markets ahead?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
Bitcoin broke above $60k earlier in the session to a fresh multi-month high on the renewed expectation that the SEC will approve a futures-based Bitcoin ETF very soon.
US Dollar losing its appear demand picks up for major counterparts. Risk of larger setback as risk appetite stabilises.
Gold prices moved higher last week, but an upbeat US retail sales report underpinned Treasury yields on Friday, which weighed on bullion. Chinese Q3 GDP is in focus for XAU traders.
The update to the UK Consumer Price Index (CPI) may undermine the recent rally in GBP/USD as the report is anticipated to show a slowdown in the core rate of inflation.
Quarterly earnings from Netflix and Tesla, two big tech companies, will take center stage next week and could set the trading tone for the S&P 500 and the Nasdaq 100.
The Japanese Yen continues to be pummeled against most major currencies.
This weekly forecast delves into ‘strong vs weak’ currency analysis as we compare the high-flying CAD to the weaker US dollar and Yen
Gold prices are poised for a breakout in the days ahead as XAU/USD contracts into longer-term uptrend support. The levels that matter on the gold weekly technical chart.
Stocks looked poised to rally with risk sentiment generally strong and technical signposts supportive of higher levels.