Dow Jones, S&P 500, US Dollar, Gold Prices, Japanese Yen, British Pound

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Volatility remained the key theme for global equity markets over the past week. On Wall Street, futures on the Dow Jones, S&P 500 and Nasdaq 100 fell about 4%, 4.6% and 4.6%, respectively. Across the Atlantic, the DAX 40 and FTSE 100 fell 3.59% and 3.62%, respectively. In the Asia-Pacific region, the Nikkei 225 and Hang Seng fell 2.39% and 4.42%, respectively.

Most of this could be traced back to the Federal Reserve. Not only did the central bank hike interest rates by 75 basis points, but Chair Jerome Powell was basically saying in no uncertain terms that the economy is going through some pain to pull out of the highest inflation in 40 years. And yet the markets continued underprice how restrictive the central bank is likely to be in the coming years.

Meanwhile, the Japanese government had to step in and intervene physically to support the Japanese yen. This followed another rate decision by the Bank of Japan on the status quo, which opened the door for further widening divergence between it and the Fed. This was the first time the government had to intervene in 24 years!

The British pound suffered particularly against the US dollar. GBP/USD fell about 3.6 percent on Friday, its worst single-day result since March 2020 and the 2016 Brexit referendum. This took the sterling exchange rate to its lowest level since 1985. Gold prices also suffered, as government bond yields rose across the board, muting the anti-fiat yellow metal.

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In the coming week, all eyes will be on a lot of Fedspeak and the central bank’s favorite indicator of inflation. The latter, PCE Core, is expected to rise to 4.7% y/y from 4.6% previously. At the top are the presidents of the offices in Boston, Atlanta and Cleveland. ECB President Christine Lagarde will also speak on Monday. Meanwhile, Russia is trying to stage quick votes on the annexation of conquered territories in Ukraine. The Italians are also going to the polls to elect their 70th government. What else awaits the markets in the coming week?



Fundamental predictions:

US Dollar strength will remain intact while US PCE shows continued inflation

The US Personal Consumption Expenditure (PCE) price index update could keep the US dollar afloat as the report is expected to show continued inflation.

S&P 500 and Nasdaq 100 Week-Ahead Forecast: Stock market sell-off could get uglier

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Rising recession fears and rising interest rates should keep sentiment depressed, paving the way for the S&P 500, Nasdaq 100 and Dow to maintain negative bias near-term.

British Pound (GBP) Forecast: Pound on the ropes as economic plan puts PM Truss at odds with BoE

Will the coming week bring much needed optimism for the pound or will the slide to parity continue?

Euro (EUR) Forecast – EUR/USD downtrend remains fully in control

The euro’s slide against the US dollar continues and barring data surprises on the upside next week, EUR/USD will continue to make fresh two-decade lows.

Gold fundamentals: S&P 500 direction may affect XAU amid gold ETF sell

Gold prices were little changed last week despite rising Treasury yields and a stronger US dollar. The weekly bullion outlook may depend on the stock market.

Bitcoin and Ethereum forecast for the coming week

The post-Fed macro environment continues to pose a challenge for risk as Bitcoin dips back below $20,000.

Australian Dollar Outlook: Fed decision rocks FX markets

Australian dollar moves remain dependent on US dollar swings as the Fed’s decision to hike 75 basis points illustrates the impact of the world’s largest central bank.

Technical forecasts:

US dollar has rushed to new highs in a crushing winning streak since 2002, where to?

The probability of the US dollar strengthening the most since March 2020 last Friday was around 0.1%. With fresh 2002 highs in sight, where does DXY go next?

S&P 500, FTSE 100, DAX 40 and Hang Seng forecast for the coming week

The S&P 500 led a slump in global equities, but it has very noticeably not slipped from its June low. The situation is different for the DAX 40, FTSE 100 and especially the Hang Seng Index.

Gold and Silver Technical Outlook: Is XAU/USD and XAG/USD Trend Reversal Imminent?

Gold failed to continue its decline after a bearish breakout last week. Silver’s rally has stalled. Does this mean a delay or a warning of a trend reversal?

Crude Oil Weekly Forecast: $90 the new resistance for Brent?

Technical analysis shows that Brent crude may see further downside as USD 90 looks to trade support for resistance.

Canadian Dollar Forecast: USD/CAD, CAD/JPY, GBP/CAD

USD/CAD staged a massive breakout to climb fresh 2-year highs last week, negating a bear flag in the process. Can USD/CAD Bulls Keep Pushing?

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