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Risk appetite notably improved this past week on Wall Street. Dow Jones futures lead the charge, surging 5.89% to the highest since late August. Meanwhile, S&P 500 and Nasdaq 100 futures rose 2.62% and 3.32%, respectively. In Europe, the FTSE 100 and DAX 40 gained 1.12% and 4.03%, respectively. Australia’s ASX 200 climbed 1.63%.
Overall, a solid earnings season helped propel sentiment higher this past week. Certain big-tech companies, such as Microsoft and Google parent Alphabet, charged higher. There was some volatility as Meta’s stock fell as much as 25% following dismal earnings. Meanwhile, Caterpillar Inc. saw earnings surprise higher on strong parts demand.
Meanwhile, Fed moderation bets gained traction, cooling the US Dollar. In the week ahead, all eyes turn to the US central bank as it likely delivers another jumbo 75-basis point rate hike on Wednesday. That would bring benchmark lending rates to 4%. More attention will be placed on their guidance going forward as the pace of tightening is seen slowing.
Outside of the Fed, AUD/USD will be eyeing a much less aggressive rate hike from the Reserve Bank of Australia on Tuesday. This is as the British Pound eyes a potential 75-basis point rate hike from the Bank of England on Thursday. Then, markets will shift focus on US non-farm payrolls data on Friday. Will a slowing labor market offer markets some optimism?
Other notable economic prints include New Zealand’s jobs report for NZD/USD. Chinese manufacturing PMI will reveal how the world’s second-largest economy is faring amid slowing global growth. Earnings season is also still in play, with companies such as Moderna, Uber and Toyota reporting. As such, another busy week is in store.
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US Dollar Performance vs. Currencies and Gold
The US Dollar faces another 75-basis point rate hike from the Federal Reserve in the week ahead. Lately, more attention has been placed on a moderating central bank. Will NFPs support that?
This week’s Q3 earnings releases roiled equity market sentiment with high-profile names Amazon and Meta, in particular, hitting the Nasdaq hard.
EUR/USD may struggle to retain the advance from the monthly low (0.9632) as the Federal Reserve is expected to implement another 75bp rate hike.
Gold prices could recover in the near term if the Federal Reserve embraces a less hawkish posture and signals that it will raises rates less forcefully in the future amid growing economic risks.
Recent rate hikes have been positive for USD but not for the pound. Strong US fundamentals also point to lower GBP/USD ahead of more possible US job additions (NFP)
The Dollar has come off hard in recent trade, and as we head into a new week we will need to closely watch how strength plays out; levels and lines to watch.
Stocks surged this week with all three major indices rallying to multi-week highs ahead of the Fed. The levels that matter on S&P 500, Nasdaq & Dow weekly charts.
Gold and silver prices fell on Friday, spoiling early-week gains. Gold is eyeing a breakout above resistance from a Double Bottom pattern. Silver failed to clear a key SMA as RSI fell below 50.
Crude oil’s rebound this week may not necessarily imply the resumption of the broader uptrend. Indeed there is a risk of an extended sideways range. What is the rationale and what are the key levels to watch?
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