Markets week ahead: Nasdaq 100, Dow Jones, US dollar, gold, euro

Global market sentiment continued to improve last week. On Wall Street, Nasdaq, Dow Jones and S&P 500 futures closed at +1.84%, -0.31% and +0.23% respectively. Tech stocks have seen a disproportionate rise. In Europe, the DAX 40 and the FTSE 100 closed +0.67% and +0.22% respectively. Meanwhile, Japan’s Nikkei 225 gained 1.35%.

The strength of the US ISM manufacturing index at the start of the week helped calm fears of a recession by underscoring the resilience of the economy. This was then followed by an impressive jobs report. The United States unexpectedly added 528,000 non-farm payrolls, while wage growth also surprised higher.

But, a disconnect seems to be brewing. Since June, markets have been pricing in Federal Reserve rate cuts in 2023, despite a 75 basis point hike at the end of last month. Growing fears of an economic slowdown seem to be boosting bets on a Fed pivot. Such an outcome could occur when inflation slows significantly, but could be a long stretch for this year.

So Fed policymakers have spent most of the past week play down market expectations of a pivot next year. This is creating disappointment in sentiment and the jobs report has further underscored this. As far as fed funds futures are concerned, a further 25 basis point rate hike has been forecast by the markets for this year.

With that in mind, the US Dollar, Gold, Euro, Japanese Yen, and Wall Street are looking to the next CPI report. Next week, headline inflation in the US is expected to slow to 8.7% YoY for July. That would be down from 9.1% previously. Worryingly, the Core Gauge is expected to rise to 6.1% YoY from 5.9% previously. Another strong impression could easily erode the market gains seen in recent weeks.

Other key economic data to watch include Chinese inflation and UK GDP figures before the US wraps up the week with sentiment from the University of Michigan. Earnings season is also underway and Wal Disney Co. is reporting. Particular emphasis will be placed on the performance of their streaming service. What else is in store for the markets in the coming week?


Fundamental forecasts:

S&P 500, Nasdaq 100 Price Outlook for the Week Ahead

US equity markets are down after the latest explosive NFP report, with Wednesday’s US inflation report expected to be the next market driver.

US dollar outlook hinges on July inflation data after Gangbuster jobs report

The US Dollar should remain supported in the near term on a bet that the Fed will remain engaged in a hawkish tightening cycle amid scorching labor markets and high inflation.

Aussie Dollar Outlook: RBA and Trade Plays in AUD

The Aussie dollar surged throughout the week, with a rate hike from the RBA and Fed speakers undermining it before trade data provided some support. Where to buy AUD/USD?

Mixed Gold Price Outlook After NFP Report Blowout

Gold’s recent rally stalls as latest NFP report tempers recession fears for now.

GBP/USD Weekly Forecast: BoE Expects Recession, Pound Breakdown

GBP suffers from BoE’s gloomy outlook

USD/CAD rally will persist if US CPI points to lingering inflation

U.S. Consumer Price Index (CPI) Update Could Sway USD/CAD as Federal Reserve Works to Curb Inflation

Technical forecasts:

S&P 500, Nasdaq 100, Dow Jones Predictions for the week ahead

Inventories have generally been strong, but this outlook may come under some pressure in the days/weeks ahead; scenarios and levels to monitor.

British Pound (GBP) Weekly Forecast: UK GDP Expectations Boosted by Recession Fears

GBP/USD remains under pressure heading into a moderately calm week from a UK perspective with UK GDP under the microscope.

US Dollar Technical Forecast for the Week Ahead: Is the Dollar Correction Over?

The US Dollar ended a two-week losing streak with DXY reversing just before technical support – will the uptrend resume? Key levels on the weekly technical chart.

Japanese Yen Technical Forecast: USD/JPY, EUR/JPY, GBP/JPY, AUD/JPY

The Japanese yen entered the week with a full head of steam, but staged a sharp reversal as US Treasury yields started to rise again. Is there more in store for Yen bears?

Gold and Silver Technical Outlook: XAU/USD Eyes Breakout as XAG/USD Struggles

Gold prices closed above a key trend line last week, but progress has been somewhat lacking. Meanwhile, silver is struggling to keep up, is this a sign of weakness?

Crude Oil Technical Forecast: WTI Chart Shows More Losses Ahead

WTI crude oil prices fell almost 10% last week, dragging prices to the lowest since February. The chart for the commodity shows that further losses could occur after breaking through the key levels.

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