Global markets were relatively calm this past week. Equity investors drove stocks higher, sending major indices like the S&P 500[1] to fresh all-time highs. Perhaps this was motivated by a sharply weaker US Dollar[2] and repricing of Fed taper risk that followed a big miss on NFPs[3]. In turn, the disappointing data brings the ‘bad news is good news’ narrative back into focus for stocks.
Gold[4] jumped 3.6% to its highest level in 12-weeks as real yields tumbled and helped catapult precious metals. Crude oil[5] was able to eek out a modest 2% gain with concerns about demand from India overshadowed by optimism surrounding economies reopening elsewhere. EUR/USD[6] price action exploded 147-pips higher on the week thanks to broad-based US Dollar selling pressure. GBP/USD[7] spiked 170-pips as the Sterling strengthened in response to the Bank of England tapering its QE program. Although, with the UK ending its lockdown and vaccinating over half of its population, the FTSE 100[8] hit a fresh 15-month high thanks to a 2.3% advance.
Looking to the week ahead, big ticket items include the release of US inflation and retail sales data. These high-impact data releases stand to set the tone for trader risk appetite. Not to mention, consumer sentiment reports are due out of the Eurozone and US as well. Other notable event risk detailed on the DailyFX Economic Calendar[9] includes the release of 1Q UK GDP slated to cross wires Wednesday, 12 May at 06:00 GMT. Also, Banxico is scheduled for an interest rate decision on Thursday, 13 May at 18:00 GMT and warrants keeping tabs on USD/MXN[10] price action.
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