Early in the new trading week, market participants will focus on the speeches from the leaders of the Central banks including the Fed, BoC and BoE before Wednesday’s US inflation report. Aussie employment data will be the focus on Thursday before Friday’s US treasury reports. Meanwhile, risk sentiment is expected to influence the market forces.
Last Week Recap
Last week was for macros and the central banks with inputs from OPEC and the general market risk sentiments. After the Fed report and a better than expected US job report, the dollar dropped significantly on Friday as the risk-on mood muscled in. In spite of that, the greenback closed the week positive although was way below expectations. The equities market pushed higher as the S&P 500 closed the 6th consecutive profitable week. Metals broke out of weeks-long range. Gold closed its most brilliant week since 5th July as it shattered 1800 and now close to 1834 key resistance zone, largely fuelled by a collapsing US 10-y bond yield prices.
As for other currencies, the Sterling fell the most after a disappointing BoE monetary statement. The EUR stayed quiet but the Yen was among the top gainers. CAD, AUD and NZD all closed downbeat for most of the week. In all, Equities, Gold and Yen were the biggest performers last week leading the Dollar by a significant distance.
Looking into the new week, risk sentiment and some macroeconomics are expected to be the major drivers. Fed Chair will speak on Monday and probably talk more about inflation and the pace of taper before the next rate hike. A few hours after, the Bank of England’s Gov Bailey will speak at a different event. The market might scrutinize their speeches, to figure out extra information after last week’s monetary policy statements.
On Tuesday, the US PPI figure will precede the CPI figure scheduled for Wednesday. Meanwhile, the Fed and BoE leaders will be joined by the BoC Gov Macklem at an event jointly hosted by the Federal Reserve Board, Bank of Canada, Bank of England, and European Central Bank.
On Wednesday, we will have the US CPI figures before Australia’s Employment reports on Thursday. Also, on Thursday, bank holidays in the Eurozone, Canada, and the US might slow down volatility.
However, we might see better volatility on Friday as the week closes with the US Treasury Currency Report.