Market sentiment improved this past week, with information technology shares leading the way. On Wall Street, the Nasdaq 100 gained 4.71% while Dow Jones futures gained just 0.87%. Things were also looking good elsewhere. In Europe, the DAX 40 gained 1.58% while the Euro Stoxx 50 pushed forward 1.69%. Meanwhile, Japan’s Nikkei 225 and Australia’s ASX 200 rose 2.24% and 2.11% respectively.
Despite the improvement in sentiment, the haven-linked US Dollar outperformed its major peers. A notable exception was the commodity-linked Australian Dollar, which pulled off a rise during the final few days of the week as growth-linked Copper prices gained. The Euro notably underperformed as markets continued trimming back hawkish ECB policy expectations.
Markets were initially pulling back hawkish Federal Reserve policy expectations amid global growth concerns. However, this reversed course at the end of the week. Another solid US non-farm payrolls report, which also included higher-than-expected average hourly earnings, continued to point to a scenario where the central bank needs to maintain its rate hike course.
All of this did not bode well for the anti-fiat yellow metal, with gold prices seeing the worst weekly performance in 2 months. Now, all eyes are turning to July’s US inflation report. On Wednesday, headline CPI is expected at 8.8% y/y, which would be up from 8.6% in June. Mind you, the June reading is what inspired the 75-basis point rate hike.
With that in mind, traders ought to remain vigilant. Another strong print, especially amid the latest jobs report, could easily restore market volatility. Outside of CPI, the Bank of Canada rate decision is next week where a 75-basis point hike is expected. Australia’s latest jobs report will also cross the wires. China’s second-quarter GDP will also be known. What else is in store for markets?
US DOLLAR PERFORMANCE VS. CURRENCIES AND GOLD
Next week’s U.S. consumer price index report could show June inflation accelerated to new multi-decade highs, a result that could boost Treasury yields and the U.S. dollar in the near term
All of Nothing on US CPI. Russian Gas Flows Key to Europe
Bitcoin has picked up a small bid this week and moved marginally higher. While the short-term outlook looks marginally more positive, the longer-term outlook remains negative.
USD/CAD may face a larger correction ahead of the Bank of Canada (BoC) interest rate decision as the central bank is expected to normalize monetary policy at a faster pace.
The Dollar reversed on Friday in the face of a generally bullish NFP report; some weakness in the days ahead looking likely.
Stocks rallied in the first full week of July and that move held through a strong NFP report. Next week brings CPI, and then the start of earnings season the following week.
The British Pound fell for a second week against the US Dollar, setting a fresh multi-year low. A rebound may occur, but the chance for a trend reversal looks slim. Where is GBP/USD headed?
Gold collapsed more than 3.8% this week with XAU/USD now testing multi-year uptrend support. Battle-lines are drawn. Levels that matter on the weekly technical chart.
Oil prices have rebounded off of recent lows after bears failed to drive prices below Fibonacci support at $93.5. Key technical levels continue to hold firm.