Currencies:
Weekly changes: EURUSD +0.37%, GBPUSD +0.44%, USDJPY -0.51%, USDCAD -0.35%
The EURUSD had approached the 1.2245 level three times during a week but closed it at 1.21770 due to firm U.S.data. The first mentioned price zone has the potential of further rise, but the lack of interest in the U.S. dollar makes the scenario quite unlikely.
The GBPUSD pair rose above 1.4200 for the first time since February, early this week. The pair was boosted by a weak greenback and bets on a faster U.K. economic recovery. The positive retail sales data release made the pair exceed 1.42360 towards the end of the week. Due to the U.S. dollar's current status, the pair slightly slipped down without losing weekly gains.
The USDJPY pair continued to be safe between the 108.60 and 109.30 tight price corridor, without any clear direction. The price fluctuations were caused by the mixed Japanese statistics throughout the week. The movements started with the negative GDP data release, followed by improved imports and export figures, but shadowed by consumer prices at the end of the week.
KEY POINTS:
The greenback fell this week on the back of speculation that the U.S. Federal Reserve will have to tighten its ultra-loose monetary policy sooner than anticipated. On the other hand, eurozone business growth accelerated at its fastest pace in over three years, but European Central Bank president Lagarde said an uncertain recovery still needed emergency support from the ECB. The following week will show the release of important American macroeconomic figures, and their positive output may help the greenback boost.
General weakness is likely to continue in the near term with the U.S. dollar but dissipate afterwards. On the one hand, the U.S. absolutely outperforms the eurozone and Japan. On the other, the Americans received vast amounts of money on hand over the past year. And these funds not only work in the economy as the jobs recover, but they also raise inflation and weaken the country's currency.
The British pound benefited for the third consecutive week against the U.S. dollar. The U.K. PMI data outperformed its expectations, as hotels and other previously closed customer services saw a jump in demands. The country's recovery is already priced into the sterling, but it's impossible yet to count its impact on GDP.
Gold:
Weekly changes: XAUUSD +2.05%
XAUUSD rose to 1,890 USD, marking the highest level in four months, but closed the week about 10 USD lower. The greenback strengthened the local statistical factory output growth. And the same time, the precious metal received support from the extreme volatilities in cryptocurrency markets this week.
Growing American inflation and lower Treasury bills yield pushed the gold higher. At the same time, the investors got rid of concerns over FOMC minutes last Wednesday that showed Fed officials were open to discussing tapering bond purchases. Last week the initial jobless claims data was positive, signalling the steady improvement in the job market.
KEY POINTS
The XAUUSD pair started the week strongly and extended its rally on Wednesday with its highest peak since January at 1,890 USD due to the USD weakness. The FOMC meeting minutes boosted U.S. Treasury bond yields and helped the greenback regain the strength. The pair then lost its bullish momentum and retreated to the 1,870 USD level. Gold struggled to push higher and settled above the 1,880 USD on Friday, the third straight week in the positive territory.
Important levels: 1,820, 1,850, 1,890, and 1,900.
Indices:
Weekly changes: SPX500 -0.56%
Last week, the U.S. stock market finished the earnings season with a few equities of the retail sector exceeded the expectations, which enabled the SPX500 to rise to 4,180.80 USD at the start of the week. The situation worsened on Wednesday as increased regulatory concerns from China arose and causing the index to tumble to 4,076 USD. By Friday, the market's direction became uncertain as the technology sector stocks slipped, and the indicator closed at 4,155.86 USD.
As U.S. stocks are hit with volatility, some investors may look at eurozone equities due to their attractive underperformance. Investors see an opportunity as the eurozone's recovery begins to occur, while the U.S. economic growth rate is expected to peak soon.
KEY POINTS
The hint on tapering from the latest FOMC meeting minutes was enough to trigger a rally in U.S. government bond yields. The yield on the benchmark 10-year U.S. Treasury traded at a 1.62% level.
The investors also look further ahead to the recovery and are cautious about potential tax changes U.S. President Biden had proposed months ago and their impact on growth. The President's plan changes the corporate rate from 21% to 28%, and the taxation rise may take the potential income away from equities' growth.
Most traders are still bullish this year with the stimulus. The Fed is committed to being dovish with the economy reopening due to vaccinations and overall corporate earnings rising.
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