Nasdaq 100, Dow Jones, US Dollar, Gold, Bitcoin, FTX, G-20 Summit

Market sentiment improved noticeably over the past week. On Wall Street, Nasdaq 100, S&P 500 and Dow Jones futures rose by 8.4%, 5.7% and 4.02% respectively. These were some of the best performances in months. Risk appetite also improved worldwide. The Dax 40, Nikkei 225 and Hang Seng rose 5.68%, 3.91% and 7.21% respectively.

The main driver of sentiment last week was October’s US inflation report, where both the headline and core CPI unexpectedly softened. Traders quickly cut their 2023 Fed rate hike bets as the odds of a 75 basis point hike in December almost disappeared overnight. The US dollar fell as gold prices rose.

From a financial market perspective, these data overshadowed the US midterm elections, where expectations of a Republican “red wave” wavered. Cryptocurrencies were in the hot seat last week amid FTX’s bankruptcy filing after Binance walked away from a possible acquisition. Despite the rise in stocks, Bitcoin was down about 20 percent last week.

As for the risk of economic events next week, the US will see more Fedspeak, PPI and retail sales data. Unexpectedly strong readings here could to some extent risk reversing some of the market movements of the CPI print last week. For British pounds and Canadian dollars, the UK and Canada will release inflation data.

Meanwhile, the group of G-20 nations will meet in Bali, Indonesia in the middle of the week. Tensions are high amid the war in Ukraine and ongoing high levels of inflation. Earnings season is also in play, with major retailers in focus such as Walmart and Home Depot. What else is in store for the financial markets in the week ahead?

Performance in US dollars vs. currencies and gold

Basic forecasts:

British Pound Weekly Forecast: Data-packed week for GBP (dailyfx.com)

GBP/USD rallied last week, but with a full UK economic calendar ahead, cracks may be starting to appear.

Australian Dollar Outlook: US Dollar Crunch Boosts Aussie

The Australian dollar roared to life last week after soft US CPI data sent government yields and the US dollar into the basement on hopes of a Fed pivot. Will AUD/USD continue to rise?

Cryptocurrency Meltdown Pauses After FTX and Alameda Implosion

Two of the biggest names in the cryptocurrency market, FTX and Alameda, may be worthless now after revealing losses of billions of US dollars.

The outlook for the US dollar turns bearish as slowing inflation could further weigh on yields

The US dollar could extend its short-term correction as a slowdown in US inflation could keep government yields skewed to the downside as traders reprice easing monetary policy.

Gold Price Forecast: Soft US Inflation Data Has XAU/USD Seeing Less Hawkish Fed

Gold prices rose the most since March 2020 last week as a softer US inflation report saw traders priced in a less hawkish Federal Reserve. Going forward, eyes are on Fedspeak, PPI and retail sales data.

The EUR/USD exchange rate is high in August ahead of the US retail sales report

EUR/USD is on course to test the August high (1.0369) ahead of the US retail sales report, amid growing speculation of a smaller rate hike by the Federal Reserve in December

Canadian Dollar Outlook: Outlook remains mixed despite fall in USDCAD

The outlook for the Canadian dollar is mixed as the Loonie struggles against G10 counterparts.

Technical forecasts:

Gold price forecast: Gold breakout underway as silver eye resistance

A gold price breakout is underway with a nearly 5% rally taking the price through annual downtrend resistance. Levels That Matter on the XAU/USD Weekly Technical Chart.

S&P500, Nasdaq, Dow Jones, DAX forecast for the week ahead

If stocks aren’t selling off on bad news, something else is probably going on. And for the Nasdaq and S&P 500, there could be a continued squeeze after bullish breaks of falling wedge formations.

WTI Crude Oil Technical Forecast: Morning Star candlestick pattern hints at higher prices

WTI price action does not present the clearest picture at the moment. Any further gains are likely to be capped by the double top formation.

GBP Technical Forecast: Sterling Drivers Remain Limited Despite USD Rise

The pound may appear to have turned a corner against the dollar, but broader comparisons confirm that the GBP remains under pressure

Japanese Yen Technical Outlook: Is the USD/JPY Rally Over?

A sharp drop last week has increased the odds of a temporary top in USD/JPY. How might the trend play out in the short term, and what are the signs to watch for?

Technical forecast for the US dollar for the coming week

The dollar sell-off after Friday’s CPI numbers has DXY moving lower towards its 200-day MA.