Markets Week Ahead: Dow Jones, USD, Euro, Canadian Dollar, CPI, ECB, BoC, French Election

Global market sentiment turned pessimistic this past week, particularly in growth-sensitive equities. On Wall Street, Dow Jones and S&P 500 futures fell 0.23% and 1.19% respectively. Meanwhile, the tech-heavy Nasdaq 100 declined 3.54%. Risk aversion also hit Europe, in the German DAX 40 falling 1.13%. In the Asia-Pacific region, the Nikkei 225 sank 2.46%

A hawkish Federal Reserve continues to be in the focus for investors, with policymakers doubling down on the willingness to deliver 50-basis point rate hikes. Treasury yields extended gains, with longer-term maturities outperforming near-term ones. As a result, the US Dollar strengthened to the detriment of the Euro and British Pound. Rising yields also worked against the Japanese Yen.

Anti-fiat gold prices remained resilient despite this, perhaps capitalizing on rising prospects of more sanctions from the West against Russia as the latter’s attack on Ukraine prolonged. Looking at energy, WTI crude oil prices fell about 1.4% last week, closing at the lowest since the middle of March. Covid-related lockdowns in Shanghai and temporary supply relief may have played a role.

The week ahead is loaded with economic event risk. Inflation continues to be a key topic, with US CPI on tap. The median estimate is for headline inflation to hit 8.4% y/y for March, up from 7.9% in February. This is as United Kingdom CPI is anticipated at 6.7% y/y for the same period. We will also see the impact of rising cost of living on politics, with the French presidential election on Sunday.

Two major central banks are also on tap, with interest rate announcements coming from the Bank of Canada and the European Central Bank. A 50-basis point hike is expected from the former, opening the door for Canadian Dollar strength. No changes are anticipated from the latter, but keep an eye out for hawkish commentary for the Euro. What else is in store for markets next?

 

FUNDAMENTAL FORECASTS:

Australian Dollar Outlook: Domestic Factors Sidelined as the Fed Talks Up Rates

The Australian Dollar has strong fundamentals, but external influences are dominating for now. Will the strong economy be realised in the AUD/USD price?

Euro Weekly Forecast – Will the ECB Disappoint the Hawks Next Week?

Next week’s ECB monetary policy meeting will test President Christine Lagarde’s ability to manage market expectations while at the same time proving that the central bank remains in control.

Crude Oil Fundamental Forecast: US-IEA Release, Shanghai Woes to Weigh as Inventories Rise

Crude oil prices dropped for a second week amid Chinese Covid woes and increasing US production and inventory levels. Along with headwinds from a coordinated IEA release, prices may drag.

US Dollar Weekly Forecast: King Dollar Breaking Out, More Gains Ahead?

Fed hawks keep the USD on the front-front. Lack of alternatives sees USD remaining as king.

Sterling Fundamental Forecast: GBP Desperate for Bullish Catalyst

Inflation induced cost-of-living crisis weighs on the pound but seasonality trends reveal April to be sterling’s best month of the year

Bitcoin Treads Cautiously Along Key Technical Levels

Bitcoin prices have stabilized above the key psychological level of $45,000 but can technical remain as prominent drivers of price action?

S&P 500 Forecast: Rising US Consumer Prices to Drag on Risk Appetite

Fresh data prints coming out of the US may drag on the S&P 500 index as the Consumer Price Index (CPI) is expected to increase for the seventh consecutive month.

Gold Price Forecast: XAU/USD Lacks Directional Conviction on Conflicting Market Forces

Gold prices may lack directional conviction and chop around current levels in the coming days as U.S. dollar strength and rising yields are offset by elevated geopolitical risk premium and recession anxiety.

TECHNICAL FORECASTS:

Canadian Dollar Outlook: USD/CAD Finds Support at 1.25 and Hasn’t Looked Back Since

The fading loonie has USD/CAD pushing 3-week highs while focus shifts to next week’s U.S. CPI and Bank of Canada rate decision.

Crude Oil Forecast: Oil Drills into Support- WTI Correction Levels

Oil prices have plunged 27% off the highs and the correction may yet drill deeper in the days ahead. The technical trade levels that matter on the WTI weekly chart.

S&P 500, Nasdaq 100, Dow Jones Forecast for the Week Ahead

Stocks are in a bit of limbo at the moment, making the outlook a bit murky at the moment; levels and lines to know.

Gold Price Forecast: XAU/USD Holds Critical Support as US Rates Surge

Treasury yields have surged but Gold prices just continue to stick at a huge spot of support with long-term implications. Are bulls lurking around the next corner?