Market sentiment struggled this past week, with most benchmark stock indices ending in the red. On Wall Street, the Dow Jones and tech-heavy Nasdaq Composite closed -0.53% and -0.32% respectively. In the Asia-Pacific region, the Nikkei 225 and Hang Seng declined 1.29% and 1.22% respectively. An exception was in the UK, where the FTSE 100 rose almost 0.5%.
This meant a rosy week for the anti-risk US Dollar, but most of its progress occurred on Friday following persistent losses throughout the week. A dovish Federal Reserve meant that December 2022 rate hike bets were mostly unchanged. Gains in the USD may have been a sign of month-end rebalancing. Treasury prices rose as yields weakened, suggesting some degree of risk aversion.
The Canadian Dollar also outperformed in the aftermath of a less-dovish BoC earlier in the month, holding its ground against USD. Strength in the Greenback cooled off recent gains in precious metals, such as gold and silver prices. It remains to be seen if the US Dollar can extend its gain as May begins, but a lot of eyes may be on the British Pound ahead.
The Bank of England is due for its next monetary policy announcement. This is as Scotland holds parliamentary elections. Enough support for the Scottish National Party could bring back expectations of another independence referendum. As such, it could be a volatile week for Sterling. Meanwhile, the Australian Dollar will be eyeing the next RBA rate decision.
As for economic data, the US will release April’s non-farm payrolls report. But, it is unclear to the extent it can drive Fed monetary policy expectations if the central bank is not anticipated to act in the short run. The Canadian jobs report could thus be more interesting for the Loonie given recent action from the BoC. What else is in store for financial markets in the week ahead?
A strong earnings season has equipped investors with fresh optimism but price action may struggle to post progress as seasonal headwinds pick up in the month of May. As a result, gains may slow.
The cryptocurrency market continues to rebound sharply with Ethereum charging higher and printing repeated new highs.
The price of gold may remain under pressure ahead of the US Non-Farm Payrolls (NFP) report as 10-Year Treasury yield recovers after defending the April low (1.53%).
April’s strong rally in EUR/USD still shows no sign of losing momentum and the pair could well extend its gains in the first week of May.
GBP heading for a typically weak month, which comes ahead of Scottish Election risks. While the BoE may announce a QE taper.
The Australian Dollar could fall given a dovish RBA after disappointing first-quarter inflation data. But, further gains in the Dow Jones could signal support for the sentiment-linked AUD.
USD/MXN is trading back above 20.00 Pesos per Dollar as rising bond yields help the US Dollar stem its losses.
The Nasdaq 100 index may be set to push to new record highs after forming a bullish inverse “Head and Shoulders” (H&S) chart pattern, which hints at further upside potential.
Gold is set to close out April higher, breaking a 3-month losing streak. Prices may aim for channel resistance if XAU/USD breaks above its 100-day SMA.
Sterling may be vulnerable to further losses after reversing off key technical resistance. Here are the levels that matter on the GBP/USD weekly chart heading into May.
Oil has started to tangle with a massive zone of resistance that’s rejected bulls for each of the past three years. Why might this time be different?
USD/JPY rose sharply last week off an important trend-line; short-term chart offers some guides to watch as the pair tries to continue its advance.
The Australian Dollar appears at risk of a reasonable decline in the week ahead against the US Dollar. However, bullish technical suggest further gains against the Japanese Yen may be at hand.
US Dollar Weekly Performance Against Currencies and Gold