Market sentiment cautiously improved this past week as the Dow Jones[1] and S&P 500[2] climbed, placing pressure on anti-risk currencies like the US Dollar[3] and Japanese Yen[4]. Gains were not spread out evenly however, this time around the tech-heavy Nasdaq[5] Composite lagged behind the former two indices. Dismal earnings from Netflix might have contributed to this[6].
Coronavirus cases continue to grow at record daily levels in the world’s largest economy, but thus far it has not been able to materially shift the outlook for 2021 GDP estimates. With that in mind, how government officials continue treating outbreaks will be key to watch. A reintroduction or more stringent lockdown measures could risk derailing bets of a swift economic recovery.
All eyes will remain on the ongoing earnings season, with attention particularly focused on tech companies as they defend their relatively elevated stock valuations. Microsoft will have its report this coming week on Wednesday. Other companies to watch include IBM, Intel, American Express, AT&T and Tesla.
The economic docket is also fairly light. The Canadian Dollar[7] and British Pound[8] await retail sales data from their respective countries. The US releases flash Markit PMI statistics on Friday. With that in mind, investors may put a greater premium on other critical fundamental news flow such as the next round of stimulus from the US after this weekend’s EU summit on a recovery package.
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Fundamental Forecasts:
Euro Forecast: Outlook for EUR/USD Positive After ECB and EU Summit[10]
The week ahead is looking quieter but positive for EUR/USD[11] and
