Global equity markets experienced rotation-trade dynamics. Investors piled capital into more traditional industries. In the US, the Dow Jones[1] outperformed the S&P 500[2] as the tech-heavy Nasdaq[3] Composite declined. Real US Treasury yields (inflation-indexed bonds) climbed as traders felt more optimistic about the long-run path for world growth. Anti-fiat gold prices[4] tumbled.
This occurred as Pfizer announced that its Covid vaccine[5] was over 90% effective in preventing the disease. Growth-linked crude oil prices[6] gained, also boosted by news that OPEC+ could further delay raising production into next year. Energy prices are eyeing a key meeting between these oil-producing nations on Tuesday for further insight.
Yet, there remain obstacles for economic activity going forward. Covid cases are rising exponentially in the US, with Europe seeing spikes. A reintroduction of isolated lockdowns could derail global growth prospects, boosting haven-linked currencies like the US Dollar[7] and Japanese Yen[8]. This is as policymakers in the US appear to remain stalled over another fiscal package.
Australian Dollar[9], Euro[10] and US Dollar traders should watch out for speeches from chiefs of the RBA, ECB and Fed respectively ahead. For the British Pound[11] and FTSE 100[12], Brexit talks continue after Boris Johnson’s top aide, Dominic Cummings, resigned. That could mean that a deal is closer than seemed[13]. US retail sales and Chinese economic activity are also on tap. What else?
Fundamental Forecasts:
Euro Forecast: EUR/USD May Extend Last Week's Losses[14]
The falls in EUR/USD[15] early last week came as a surprise to many analysts, but an extension of those declines
