The US Dollar beat its key competitors last week. Chinese Yuan and the Australian Dollar performed better than several of the major currencies, including the British Pound, Euro, and Canadian Dollar. When it came to commodities, gold did well while crude oil declined.
Look back into the month
Longer-term Treasury rates have accelerated relative to the front-end since the financial markets started to gradually price in a higher terminal rate from the Federal Reserve at the beginning of this month. Regarding implied policy rates, stock markets have increased the expectation for the 3-year Fed rate by more than 30 basis points since July 31.
Additionally, it indicates that the financial markets are delaying their expectations of a rate decrease. In a speech last week in Jackson Hole, Fed Chairman Jerome Powell stated that the institution was ready to increase borrowing costs further if needed. Sentiment has changed in line with the recent decline in US equities markets.
So, what’s coming this week?
The economic sector is more active as we look ahead to the upcoming week in stock market. Consumer confidence, the Fed’s preferred inflation indicator, and non-farm payrolls are all slated for release from the US. Several inflation measures from significant European nations will be released elsewhere. Estimates of the manufacturing PMI will also provide financial markets with a clearer understanding of China’s increasingly precarious economic condition.
Performance of stock market at the week of 8/21
The forecast is taken from the article written by Daniel Dubrovsky, Senior Strategist at DailyFX.com
Forecast for the British pound
External Forces Will Drive the GBP/USD and GBP/JPY. In response to Jerome Powell’s speech at Jackson Hole, the dollar has received a brief buy higher in the stock market, which will cause GBP/USD to fall into the weekend.
Australian Dollar Prediction
For the time being, AUD/USD and AUD/JPY are consolidating. The Australian currency stabilized this week, but it is still weak compared to the US dollar, which is rising as the Fed continues to advocate tighter monetary policy.
Euro forecast
ECB’sources’ exaggerate the euro’s weakness before the CPI reading. As a result of the ECB Council’s advice for prudence on rates owing to the shaky economy, EUR/USD has fallen for six weeks running. The EUR/JPY is in danger.
Forecast for the Japanese Yen
Establishing and Consolidating Resistance. After a prolonged run of decline since the start of the year, the Japanese yen showed some resistance last week. However, there is still a long way to go before USD/JPY and GBP/JPY move in a significant downward direction.
Powell takes a hawkish tone, although DXY anticipates a probable pullback. USD Forecast
With a stern message from Fed Chair Powell at the conclusion of the week, the Dollar Index (DXY) maintained its stellar run. Will DXY continue to gain ground while the RSI is overbought?