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Last week’s global market sentiment ended mostly on the upside, but the days before the weekend didn’t see much of an uptrend. On Wall Street, the Nasdaq 100, S&P 500 and Dow Jones futures rose 0.54%, 1.36% and 1.86% respectively. But at one point, the tech-heavy Nasdaq rose almost 6% before evaporating most of its progress.
A sharp reversal occurred on Friday following the report of US nonfarm payrolls for September. Not only has the country added her more than expected 288,000 jobs, but the unemployment rate has plummeted from 3.7% to 3.5%. Indeed, the labor force participation rate has softened to 62.3% from 62.4% previously. All things considered, it still points to a tight labor market.
That’s not good news for the Federal Reserve, which is trying to cut inflation at its highest level in 40 years. Earlier last week, the market was starting to price in his even one rate hike in 2023. By the end of Friday it was back on the table. Central bank balance sheets also continued to shrink, reaching their lowest level since December 2021.
Unlike the stock market, WTI crude oil prices surged 16.44% in the best week since Russia invaded Ukraine. OPEC+ has signaled production cuts in the coming months to boost prices that have fallen since May. Gold prices also rose early in the week, but like equities, most of the gains were adjusted towards the weekend.
Given the US labor market, all eyes will be on this week’s inflation report. Headline inflation is seen to fall to 8.1% y/y in September from a previous 8.3%. Unfortunately for the Fed, the core gauge is projected to rise from 6.3% to 6.5%. The latter is a more pressing issue for central banks, given the risk that prices will continue to deviate from their long-term targets.
Another strong CPI report could continue to bring volatility to financial markets and boost the US dollar. This will also encourage Japan to continue intervening in the market to contain USD/JPY. For the British pound, the UK will release employment data. China has also released her CPI report. The earnings season begins with bank reporting. What else is in store for the financial markets next week?
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US Dollar Performance Vs.currency and gold
Fundamental forecast:
S&P 500, Dow Jones, Nasdaq directional fate tied to CPI after NFP sale
US stocks fell Friday after US jobs data cemented the possibility of a 75 basis point FOMC rate hike. Market direction next week will depend on the US Consumer Price Index (CPI).
EUR/USD rate vulnerable to another rise in US core CPI
Data coming out in the US could continue to rock EUR/USD as the Consumer Price Index (CPI) is expected to point to sticky inflation.
British pound weekly outlook: GBP distressed on back foot ahead of next week’s key data
GBP/USD’s secular downtrend looks set to resume as key economic data points for the UK and US loom next week.
Gold price (XAU/USD) slammed by hawkish Fed and strong NFP report
Gold remains in the US rates strategy for now as US Treasury yields rise and precious metals fall after strong US jobs data.
Australian Dollar Outlook: Dovish RBA Sinks Currency
The RBA surprised the market last Tuesday by raising its cash rate target by 25 basis points to 2.60% below the expected 50 basis points and lowering AUD/USD.
Bitcoin and Ethereum predictions for next week
Bitcoin and Ethereum continue to hold YTD lows as the risky asset landscape darkens.
Canadian Dollar Forecast: US Inflation Data Toning USD/CAD
Rising oil prices should support the Canadian dollar, but the US inflation report for September could become more important for the near-term direction of USD/CAD.
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Technical prediction:
Forecasts for the S&P 500, Nasdaq and Dow Jones for the coming week
The rally in the early part of the week weakened aggressively on Friday and the focus shifted to the next CPI report.
US Dollar Technical Predictions: USD October Battle Line Set – DXY Levels
Is the USD Correction Over? The stage is set and it’s time for the upcoming bull decisions. Important levels on the DXY Weekly Technical Chart.
US Crude Oil Technical Forecast: OPEC+ Sets Major Trend Reversal
US oil has risen for a fifth straight day after OPEC+ decided to cut production in November.Aggressive Rise Highlights $93 and $100 as Key Levels
Technical forecast for Japan one week ahead: USD/JPY, AUD/JPY, CAD/JPY, EUR/JPY
The Japanese yen has largely marked the week. USD/JPY is closely watched by the Bank of Japan after intervention efforts to support the currency. Who are AUD/JPY, CAD/JPY and EUR/JPY trading partners?
Gold and Silver Technical Outlook: Upside Might Be Contained for Now
Gold was able to recoup losses after falling below key supports last month. Silver continues to be within his established three-month range. What are the prospects and key levels to watch?
Canadian Dollar Technical Forecast: New Downward Pressure Tech Tip for Looney
Will a hawkish BoC and rising oil prices help keep the Canadian dollar at the forefront?
British Pound Analysis: GBP/USD Falls, Supporting USD Stability
The British pound (GBP) continues to struggle after a strong sell-off that pushed the price to an all-time low of 1.035.
