The Dow Jones, S&P 500 and Nasdaq Composite wobbled into this past week’s close, leaving risk trends on an uncertain note heading into the holiday-shortened week. Declining Treasury yields on the longer-dated spectrum helped push anti-fiat gold prices towards an upside breakout. Despite the risk aversion, the haven-linked US Dollar and Japanese Yen ended relatively flat for the week.
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Driving the sour mood likely has been rising coronavirus cases in certain countries: the US, China, Brazil, India and parts in Europe. Increasing infections from the world’s largest economy hit record levels, with the Houston Area declaring an emergency as Florida and Texas barred drinking at bars. Isolated lockdowns could risk derailing swift economic recovery prospects.
As markets are forward looking, these concerns could overshadow what may be more rosy data out of the US. All eyes turn to consumer confidence, ISM manufacturing PMI, initial jobless claims and Thursday’s highly-anticipated non-farm payrolls report. The minutes from June’s FOMC meeting could also reiterate that the outlook remains highly uncertain.
Meanwhile the Euro and British Pound will continue eying EU-UK Brexit negotiations. The two sides have until June 30 to decide on whether to extend the transition period. Another key fundamental theme to keep a close eye on include liquidity conditions and the Fed’s balance sheet. The latter has now shrunk over a weekly basis twice in a row.
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The coming week sees the start of a new month and a new quarter, when portfolio rebalancing could result in turbulent trading in major assets, including EUR/USD and the Euro crosses.
Crude oil prices may come under pressure as the number of Covid-19 cases in the world’s largest economy continue to surge and threaten to derail the already-dented growth outlook.
Gold prices may rise as global virus uncertainty boosts demand for safety. US Dollar weakness amid accommodative central bank policy could provide added support.
The Australian Dollar may come under increasing downside pressure as local coronavirus cases spike and tensions with China escalate.
As new virus cases increase at an undesirable rate worldwide, risk-on assets like the Peso continue to be at the mercy of risk sentiment
Global equity markets at risk from rising coronavirus cases. UK assets remain unloved over Brexit
The US Dollar may rise as initial jobless claims stabilize at historically elevated levels. Non-farm payrolls may surprise higher, but FOMC minutes could sink the S&P 500 and boost USD.
USD/JPY may stage a larger recovery going into July as the exchange rate reverses ahead of the May low (105.99).
Gold prices are poised to mark a third weekly advance but keeps price below multi-year uptrend resistance. Here are the levels that matter on XAU/USD technical chart.
The British pound may continue to fall further in the week ahead, outlook for GBP/USD.
Next week should be big for US markets, and the US Dollar is vulnerable in its current range. Can bears pose another push?
Stocks traded lower last week as the recent regime of instability and uncertainty continued. On the back of said losses, the Dow Jones has begun to exhibit signs of weakness. Will stocks fall further?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD