It’s been a positive start to the week so far, at least as far as global equity markets are concerned. Last week’s wobbles seem a distant memory as traders have jumped back in to hoover up stocks following a better-than-expected US Non-Farm Payroll release on Friday. The strong jobs number appears to have convinced many players that the US economic recovery is back on track and perfectly capable of weathering continued monetary tightening from the Federal Reserve. This is despite yet more evidence (through tepid wage growth) that inflation is still heading further away from the Fed’s 2% target.
Yet while some investors are not yet convinced that the US central bank is committed to further rate hikes, others are now looking to the ECB to follow suit. Monetary tightening is typically negative for equities as rising yields not only increase the costs of doing business but also increase the attractiveness of other investments. But traders seem happy to take advantage of a recent pull-back in stocks to load up once again. Now it’s all down to the second quarter earnings season to see whether that proves to be a clever move or not.
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EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.