Global market sentiment recovered this past week, with equities charging higher in North America, Europe and the Asia-Pacific region. On Wall Street[1], the S&P 500[2], Dow Jones and tech-heavy Nasdaq[3] Composite rose 4.65%, 3.89% and 6.01% respectively. The VIX market ‘fear gauge’ receded to its lowest in almost two months.
Despite the risk-on tone, the haven-linked US Dollar[4] managed to hold its ground in some cases. It gained against the Swiss Franc[5], Euro[6] and Japanese Yen[7], while losing to the Australian Dollar[8], New Zealand Dollar[9] and British Pound[10]. A softer-than-expected nonfarm payrolls report at the end of the week caused most of the Greenback’s decline as Friday concluded.
What will be key to watch ahead is the story of longer-term Treasury yields, which have been rising. The 30-year rate closed at its highest since February 20th, 2020. This, combined with a stabilizing Greenback, has been weighing on precious metal prices, such as gold[11] and silver[12]. US fiscal stimulus bets and rising inflation expectations down the road are likely contributing to this.
The week ahead is relatively quiet, with the Lunar New Year taking Chinese exchanges offline starting Thursday, opening the door to lower-than-usual liquidity conditions. The US will release its latest inflation figures on Wednesday, with University of Michigan consumer sentiment due on Friday. AUD/USD[13] may see some volatility around consumer confidence data.
There will be speeches from central bank policymakers to watch out for. Fed Chair Jerome Powell, ECB Chief Christine Lagarde and BoC’s Deputy Governor Timothy Lane are on tap. In addition to weekly EIA
