Markets were choppy for the most part this past week. Major stock indices[1] traded broadly sideways as did gold[2] and crude oil prices[3], though currency volatility[4] seemed to pick up quite a bit. The Nasdaq[5] and S&P 500[6] Index were little changed on balance despite reports that US President Joe Biden plans to propose a 43.4% corporate tax rate. The FTSE 100[7] and DAX 30[8] peeled back slightly from their latest swing highs, declining -1.1% and -1.2% respectively, as bulls eased off the gas pedal. Euro[9] price action was fairly muted during the ECB rate decision, but the bloc currency finished the week strong against key FX peers like the US Dollar[10] and Pound[11] Sterling.
EUR/USD[12] spiked 115-pips to a seven-week high, for example, while EUR/GBP[13] gained 55-pips to extend its rebound off 14-month lows. US Dollar selling pressure accelerated as widespread weakness sent the broader DXY Index spiraling nearly -0.9% lower. This seemed to follow more softness across Treasury yields, which weighed negatively on US interest rate differentials. The Canadian Dollar[14] saw an influx of demand mid-week after a fairly hawkish BoC statement revealed that the central bank is tapering its QE program and also bringing forward its next rate hike forecast from 2023 to the second half of next year.
Looking to the week ahead, we can see that the economic calendar[15] is littered with high-impact event risk and data releases. Traders will likely be keeping a keen eye out for expected monetary policy updates from monetary policy updates from
