To start your trading week, let us have a peek at what the global market sentiment will be like this week through our Week In Review.
Markets are set to be busy this week as global market sentiment has turned pessimistic, particularly in growth-sensitive equities.
Dow Jones and S&P 500 futures fell 0.23% and 1.19% respectively on Wall Street. Meanwhile, the tech-heavy Nasdaq 100 declined by 3.54%. Europe was also impacted by risk aversion, with the German DAX 40 losing 1.13%. The Nikkei 225 index fell 2.46 percent in the Asia-Pacific region.
Here is what you should know for this week.
USD Heading Higher
A hawkish Federal Reserve keeps the USD on top, and a lack of alternatives sees USD remaining as king.
The dollar rose for the seventh consecutive session, briefly breaking through the 100.00 level for the first time since May 2020.
USD will continue to be the focus for investors, with policymakers doubling down on the willingness to deliver 50-basis point rate hikes.
Treasury yields extended their increases, with longer-term instruments outperforming shorter-term instruments. As a result, the US Dollar rose, putting the Euro and British Pound under pressure. Additionally, rising yields weighed on the Japanese Yen.
The near-term forecast remains bullish for the US Dollar as rate differentials continue to move in favor of the greenback. Meanwhile, lower-risk assets are likely to support the dollar and keep it above the 100 mark.
Gold Prices Stay Strong
Gold rose for the second day in a row, despite a stronger dollar and a more hawkish Fed. Perhaps the ongoing Russia-Ukraine conflict, as well as concerns about the Fed’s future positioning, are keeping demand for gold high.
Despite this, anti-fiat gold prices remained resilient, possibly capitalizing on rising prospects of additional sanctions from the West against Russia as the latter’s attack on Ukraine continued.
Looking at energy, WTI crude oil prices fell about 1.4% last week, closing at the lowest since the middle of March. Lockdowns in Shanghai because of Covid and temporary supply relief may have played a role.
Both the Canadian and New Zealand central banks are scheduled to meet on Wednesday, with market observers expecting both to deliver their largest rate hikes in 20 years in the face of global inflation.
According to Reuters data, markets are pricing in a 90% chance or higher that the Reserve Bank of New Zealand will raise interest rates by half a percentage point, and a better-than-80% chance that the Bank of Canada will do the same.
With Canadian inflation expected to remain above target until 2024, another half-point increase is possible in June. New Zealand raised interest rates by a quarter percentage point in February, its third in a row, and signaled the possibility of further increases in the future.
Keep an eye on the market prices and while you wait for your trade breakout, take advantage of the Juno Markets Economic Calendar to keep yourself updated with the market’s most important economic news events. https://www.junomarkets.com/en/resources/economic-calendar/
The Week Ahead
All times listed are EDT.
2:00: UK – GDP: previously printed at 6.6% YoY.
2:00: UK – Manufacturing Production: expected to fall to 0.3% from 0.8%.
2:00: UK – Average Earnings Index +Bonus: seen to grow to 5.4% from 4.8%.
2:00: UK – Claimant Count Change: February’s reading was -48.1K.
5:00: Germany – ZEW Economic Sentiment: forecast to plunge further to -48.0 from -39.3.
8:30: US – Core CPI: probably remained flat at 0.5% MoM.
21:00: New Zealand – RBNZ Interest Rate Decision: predicted to rise to 1.25% from 1.00%.
22:00: New Zealand – RBNZ Rate Statement
2:00: UK – CPI: expected to rise to 6.7% from 6.2% YoY, while retreating to 0.7% from 0.8% MoM.
8:30: US – PPI: to advance to 1.1% in March, from 0.8% previously.
10:00: Canada – BoC Interest Rate Decision: predicted to double to 1.00% from 0.50%.
10:30: US – Crude Oil Inventories: last week’s release showed a build of 2.421M bbl.
21:30: Australia – Employment Change: forecast to nearly halve to 40.0K from 77.4K.
7:45: Eurozone: Deposit Facility Rate: to remain flat at -0.50%.
7:45: Eurozone – ECB Interest Rate Decision
8:30: US – Initial Jobless Claims: expected to rise to 173K from 166K.
8:30: US – Retail Sales: anticipated to have doubled to 0.6% from 0.3% in March.
8:30: Eurozone – ECB Press Conference
Good Friday Holiday: US, UK, Eurozone, Australia, New Zealand and other global markets closed.