Markets Week Ahead: Nasdaq, Dow Jones, US Dollar, Fed, Gold, Crude Oil, Yen, BoJ

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Investors pivoted back into growth equities this past week. On Wall Street, the tech-heavy Nasdaq Composite (+1.85%) outperformed the value-oriented Dow Jones Industrial Average (-0.80%). It was also a solid week for the US Dollar, which after persistent weakness, managed to see gains against the majority of its G10 counterparts.

Traders may be further accepting the Federal Reserve’s outlook for the economy, seeing near-term rising inflationary pressures as transitory. This is despite the fastest pace of core consumer price growth in roughly 30 years. Treasury yields are on the decline. Still, anti-fiat gold prices underperformed, perhaps driven by positioning into next week as Friday concluded.

With that in mind, all eyes are on the Fed on Wednesday. Chair Jerome Powell will almost surely be questioned about the latest CPI report and what the path for policy tapering could look like. The central bank will also release updated interest rate expectations. With volatility on the decline across financial markets, this could be a risk for a revival in market activity.

In addition to the Fed, the Japanese Yen and Swiss Franc will be eyeing the Bank of Japan and Swiss National Bank respectively. For the Euro and Canadian Dollar, inflation data will be closely eyed from Germany and Canada respectively. The Australian Dollar could be vulnerable to RBA meeting minutes if the central bank reiterates its reluctance to hike rates until much further out.

WTI crude oil prices are hovering around the highest since October 2018, closing at a new high for this year so far. The commodity could see volatility if tensions between the US and Russia worsen, increasing prospects of tougher sanctions between the two key oil producers. Joe Biden will be meeting Vladimir Putin in Geneva on Wednesday. What else is in store for markets?

FUNDAMENTAL FORECASTS:

GBP/USD Weekly Forecast: Last Chance for Currency Volatility on FOMC Meeting

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