The market opened this week with the dollar shedding some of the last week’s gains. Surprisingly, most of the risk-on instruments are also on the downside especially equities and oil. The FOMC will dominate the headlines this week as the market looks for the next clues.
Last Week Wrap
- The US stock market hit another record high last week amid earning gains and a much brighter risk appetite.
- The ECB President Lagarde said the Covid delta variant could cause a setback in recovery in the services sector. The bank, therefore, kept its financing rate at zero percent.
- Russia will raise its oil output in the second half of the year according to deputy Prime Minister Alexander Novak.
- The Reserve Bank of Australia, in its last monetary policy meeting, retained the 0.1% cash rate and maintained the $4 billion per week asset purchases.
- UK private sector growth slumped to a four-month low.
- According to some headlines, Amazon might start accepting Bitcoin later in the year.
Last Week Performance
Equities
The US stock indices reached fresh record highs last week. S&P 500 closed over 1.8% up despite starting the week over 2% in the red. Dow and NASDAQ traded similarly, gaining 1.5% and 4% respectively.
European stocks also closed the week on the green side but many of the Asian stocks closed with significant losses.
Currencies (Forex)
The Candian dollar led the FX gainers table last week, posing significant strength across the board. The US Dollar and Swiss Franc were the other two gainers.
Meanwhile, the Australian Dollar led the losers table followed by the Japanese Yen, New Zealand Dollar, Euro and the British Pound.
Commodities
Oil recovered from a drastic fall that pushed it to $65 per barrel (WTI) and $67 per barrel (Brent). However, the two oil market benchmarks roared back to close at $72 and $74 respectively.
Gold closed with nearly 1% loss but spent most of the week sideways around 1800.
Cryptocurrencies
Bitcoin closed nearly at $35,000 at the weekend. However, it roared to $40,000 early on Monday with a further breakout in sight.
Top FX Gainers (Forex pairs)
CAD/JPY +0.82%
USD/JPY +0.46%
CHF/JPY +0.41%
CAD/CHF +0.41%
GBP/AUD +0.28%
Top FX Losers (Forex pairs)
AUD/CAD -0.86%
NZD/CAD -0.71%
EUR/CAD -0.71%
GBP/CAD -0.57%
AUD/USD -0.50%
Top Crypto gainers
SUSHI/USD +43.83%
UNFI/USD +39.12%
XVS/USD +38.76%
LINK/USD +33.59%
AAVE/USD +33.13%
Top Crypto Losers
No significant losers
Upcoming Key Events
A big week awaits the dollar
US Events– Consumer Confidence, FOMC report and statements, Advanced GDP, Core PCE Price Index, unemployment claims
Other Major Events
Australian quarterly CPI
CAD monthly GDP and CPI y/y
German prelim GDP (Euro)
Speeches from the BoJ Governor, RBA deputy governor and the Fed’s FOMC press conference
Trade-Ideas of the Week
Dollar Sentiment: The dollar will add to gain if the Fed tapers the pace of its Quantitative easing programs as expected. Otherwise, another disappointment could dampen the current optimism. The dollar will therefore be event-driven.
Trade-Ideas out of FOMC: Buy the dip opportunities on CADJPY & CHF JPY and sell the rally opportunities on EURCAD, NZDCAD & AUDCAD.
Buying the next dip on the S&P 500 is also ideal but the FOMC should be watched closely.
Meanwhile, Gold and the major Forex pairs will highly depend on the FOMC outcome on Wednesday.
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