In another volatile week for global market sentiment, Wall Street managed to close in the green, but not without giving up most gains. Nasdaq 100, S&P 500 and Dow Jones futures finished +1.41%, +1.39% and +0.99% respectively. This helped the VIX market ‘fear gauge’ drop 16%. European equities were mixed with Asia-Pacific markets faring better.
Fedspeak that helped cool odds of 5 rate hike bets this year earlier in the week was somewhat offset by January’s US jobs report. The world’s largest economy unexpectedly added 467k positions versus 125k seen as average hourly earnings surged 5.7% y/y versus 5.2% anticipated. Mixed earnings between key companies Meta and Amazon also resulted in wild market swings.
The US Dollar succumbed to selling pressure, although some losses were trimmed on Friday thanks to NFPs. The Euro and British Pound were notable standouts following more hawkish interest rate decisions from the ECB and BoE respectively. Demand for EUR and GBP likely sapped some appeal from USD. Crude oil prices hit a 7-year high despite OPEC+ output hikes.
Key event risk next week will likely be January’s US CPI report on Thursday. Headline inflation is expected at 7.3% y/y, which means prices will continue rising at the fastest pace in 40 years. Another strong print, especially following NFPs, could reinforce five 2022 Fed rate hike bets as well as a 50-bps push from the central bank in March.
Outside of CPI, preliminary UK fourth-quarter GDP will cross the wires on Friday. While earnings season is slowly dying down, there are a few key companies to watch out for. Disney, Twitter, Pfizer and Uber will be key highlights. For USD/CAD traders, Bank of Canada Governor Tiff Macklem will be speaking on Wednesday. What else is in store for markets in the week ahead?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD
Wall Street equities had a rollercoaster week as FAANG earnings boosted market volatility. An uneven picture underscored challenges and opportunities ahead for big tech names.
US markets may whipsaw this week on another round of high-profile earnings after Meta and Amazon sent investors on a roller coaster. Disney, Twitter, Uber and Alibaba are set to report – here is what to watch.
BoE hawkish decision tempered by dovish Bailey, EUR/GBP working on key reversal’
The US jobs market is seemingly buoyant with this month’s NFP Report beating market expectations by a wide margin. And that may spell trouble for the cryptocurrency market.
The US Dollar Index (DXY) bounces back from a fresh monthly low (95.14) following the 467K rise in Non-Farm Payrolls (NFP), and the update to the Consumer Price Index (CPI) may fuel the recent rebound in the Greenback as the gauge for inflation is expected to increase for the fifth consecutive month.
The Euro soared last week with NFP’s dampening spirits on Friday. The week ahead includes US CPI data while EUR/USD holds its head above 1.14.
The Mexican peso is likely to weaken against the dollar if U.S. inflation accelerates further and helps to consolidate expectations of a 50 bp hike by the Fed at its March meeting.
The Australian Dollar has found strength despite a dovish RBA swimming against global hawkishness as the US Dollar commands control.
Gold entered a period of consolidation after the prior week’s sharp sell-off, producing what appears to be a bear flag. Key technical levels explored.
The market had a big bounce following a mini-panic, but things could turn bearish again in the days/weeks ahead.
WTI crude oil prices closed at a September 2014 high as well as a new 2022 peak. Retail traders continue selling, hinting at further gains. Are there any technical signs of weakness ahead?
It was a bad week for the US Dollar, even with U.S. rates hitting fresh highs. Given the backdrop in majors of EUR/USD and USD/JPY, there may be more pain in store for the USD.