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Despite civil unrest over the past week on Capitol Hill, US and world equities ended on a high note, starting the first full week of the new year. The Russell 2000, an index that measures the performance of mostly small-cap U.S. companies, outperformed the technological Nasdaq 100. The S&P 500 and Dow Jones followed suit.
What was more interesting was the story of fixed assets. Treasury long-term yields have risen, with rates for thirty-ten years rising the most since August. Financial markets welcome the Democratic Senators who won both elections in Georgia. This has opened the door to greater fiscal stimulus, providing much-needed support to an economy recovering from the coronavirus.
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The disappointing report of non-farmers that took place in December supported the case for more support. Due to rising government bond yields, gold prices could be left vulnerable after the worst week since late November. Meanwhile, the price of crude oil could benefit, also supported by an unexpected reduction in Saudi Arabia’s production following last week’s OPEC meeting.
The US dollar may also get a breather as rising local bond yields make it a more attractive investment, but the extent to which it could benefit is unclear in light of the Fed’s still dull stance. Further stock hikes are likely to continue to work against the Greenback with the refuge, with the sentiment-linked Australian and New Zealand Dollars ripe to take advantage.
Tighter closures remain a risk for markets amid the new more infectious strain of Covid-19. Markets will witness an abundance of speeches by Federal Reserve presidents such as Eric Rosengren and Raphael Bostic. Christine Lagarde, head of the ECB, is also planning. Beware of U.S. retail sales and sentiment by the end of the week. What else awaits the markets ahead?
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FUNDAMENTAL PREDICTIONS:
Sterling (GBP) Weekly Preview: Covid-19 Vaccination Program Supports Sterling
Looking ahead, the British pound will continue to draw strength from an acceleration in the UK vaccination program, despite rising infection numbers.
Australian dollar outlook: rising commodity prices to raise AUD higher
Australia’s success in suppressing the new coronavirus and rising commodity prices are likely to continue to support the cyclically sensitive AUD in the coming months.
Mexican peso forecast: USD / MXN balances on support as Covid-19 cases rise in Mexico
The sharp fall in USD / MXN has stagnated over the past few weeks as bearish momentum eased.
Crude Oil Prices Reviewing OPEC Forecast Report on Saudi Production Reduction, US Stimulus
The price of crude oil could rise after Saudi Arabia unexpectedly cut production ahead of the monthly OPEC outlook report. U.S. fiscal stimulus bets may also support WTI.
Will the S&P 500 extend its record rally at Reflasiehoop?
The seemingly unstoppable rise in U.S. stocks may have more room to go before the time is ripe for a correction. The trade in reflections appears to be gaining momentum, but the overvalues could pose risks.
Euro forecast: EUR / USD outlook optimistic on sunny market sentiment
Trader confidence has been boosted by the U.S. Democrats who have won Senate control, suggesting that it is flowing further from the safe haven U.S. dollar to ‘risk-on’ currencies such as the Euro.
Gold price forecast set by Spike in US Treasury yields
The price of gold tumbled to a new weekly low ($ 1834), with the weakness of the gold metal coinciding mainly with the recent rise in US Treasury yields.
TECHNICAL FORECASTS:
Euro weekly technical outlook: focus on EUR / USD channel structure
The EUR / USD is trending higher, but momentum has declined; still gives it the benefit of the doubt, but keep an eye on the channel.
British pound forecast: Sterling rally fallers against a trend resistance
British Pound unleashed a three-week series with the Sterling Rally stopping at technical resistance. Here are the levels of interest in the GBP / USD weekly chart.
Gold price forecast: (XAU) gold grounded as Bitcoin shoots to the moon
Gold bulls just got ground this week while Bitcoin flew to the moon. Do we have a new safe haven that takes the crown, or a mere standstill in a bigger picture?
Crude Oil Technical Prospects: Oil Rises on Saudi Surprise – Top Levels to Look At
Strong start to 2021 as crude oil increases Saudi surprise and market generation.
Dow Jones, Nasdaq 100, FTSE 100 Forecasts for the Week Ahead
Inventories rose to new heights last week as it crept into more than two months’ significant sustained gains in overbought territory. Can they continue to push higher despite getting hot?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCY AND GOLD
