Markets Week Ahead: S&P 500, Nasdaq 100, US Dollar, Gold, Japanese Yen, BoJ

Global market sentiment improved this past week across stock market exchanges around the world. On Wall Street, the S&P 500 and Nasdaq 100 gained +2.67% and 4.82%, respectively. Turning to Europe, the FTSE 100 and DAX 40 increased 1.88% and 3.26%, respectively. Meanwhile, in the Asia-Pacific region, the Nikkei 225 and Hang Seng Index climbed 1.16% and 3.56%, respectively.

US inflation continued slowing in December, clocking in at 6.5% y/y versus 7.1% in November. Although, that was in line with expectations. While the energy component continued weakening, food and shelter costs remained elevated. Still, markets took this as more signs that the Federal Reserve will soon bring its hiking cycle to a halt.

Treasury yields declined, but the pace notably slowed compared to recent weeks. Meanwhile, the US Dollar continued to weaken. The DXY Dollar Index closed at its lowest since June 2022. The best-performing major currencies were the Japanese Yen, Euro and Australian Dollar. Gold prices soared 2.93% in the best week since April 2022 as bond yields and USD weakened.

Turning to the week ahead, for once the Bank of Japan might be an interesting event for USD/JPY. That is because ever since the central bank unexpectedly adjusted monetary policy in December, there is rising speculation that more changes could be in store towards normalization. Japan will also be releasing Decembers inflation gauge at the end of the week.

For USD/CAD and GBP/USD, Canada and the United Kingdom will be releasing CPI figures as well, respectively. Meanwhile, the Australian Dollar will be paying close attention to Chinese GDP and another batch of local employment data. The earnings season is also gradually picking up. What else is in store for markets in the week ahead？

How Markets Performed – Week of 1/09

Fundamental Forecasts:

US Stocks Forecast: S&P 500 Pauses as Big Banks Stash Cash for a Bumpy 2023

Major US bank earnings prove largely resilient, but warnings of possible credit pressures send the S&P 500 lower on Friday as banks bolster cash reserves.

British Pound Fundamental Forecast: GBP/USD Turns to UK CPI After US Inflation

The British Pound pushed higher against the US Dollar this past week as softening US inflation data boosted less hawkish Federal Reserve policy bets. GBP/USD turns to UK CPI next.

Australian Dollar Outlook: Punching Higher on Soft US Dollar

The Australian Dollar jumped higher on renewed optimism around China‘s re-opening and the US Dollar taking a pounding the market discounts the Fed’s words. Will AUD/USD go higher？

Dollar Pushes 7-Month Lows but Dive in Rate Forecast Cooling, VIX Connection Important

The broader measure of the US Dollar – the DXY Index – dropped its lowest level since early June this past week. The reversal seems productive with the 2022 run up providing plenty of premium to burn, but the fundamental backing to this move is less reliable than bears may appreciate.

Euro Fundamental Forecast – EUR/USD May Struggle in the Short-Term

The recent sell-off in the US dollar can be clearly seen in a born-again EUR/USD which continues to probe higher. Sterner tests for bulls lie ahead.

Technical Forecasts:

US Dollar Technical Outlook: Slide Showing Signs of Fatigue？

The US dollars broad decline remains intact, but the slide could slow or even pause as it approaches key support area across a range of currencies. What is the outlook and the key levels to watch on some of the major currency pairs？

Gold, Silver Price Forecast: Gold Breakout, Silver Resistance Test

Gold put in a massive move of strength this week, but Silver is struggling with the same spot of resistance thats held the highs for a month now.

BTC/USD Outlook: Bitcoin Bulls Bounce Back After Double Digit Gain

Bitcoin prices have risen above key technical resistance buoyed by USD weakness and a move above prior resistance at $17792. Can BTC/USD retest 2017 highs and break $20000？

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

Stocks put in a strong bullish response after CPI data and the S&P 500 is threatening breakout from the 2022 bearish trendline that held the highs for most of last year.