The market's pulse
SPX500 closed week at record highs. +353 points
Strong American jobs report renewed confidence in the economic recovery. +943K jobs
Gold suffers losses. -4,811 points
Oil prices hit by demand concerns. -5 USD
Bitcoin rockets to 45,000 USD. +5,600 USD
Let's take a closer look at how these and other important events affect currency prices, indices, and commodities.
Indices
Weekly changes: SPX500 +0.8%
SPX500 closed the week at 4,436.52, following the very strong NFPs. The Labour Department also posted the 16-month low unemployment rate. The upbeat data renewed confidence in the country's economic recovery.
The U.S. Dollar Index (DXY) gained the most in three weeks and closed Friday at 92.78, motivated by the NFP report.
BULLISH TRIGGERS
The index rose by 17.2% for the year to date. The reason is close to zero interest rates and the highest percentage of the companies inside SPX500 since 1994, which had beaten analyst expectations on earnings (87.6%).
The greenback got firmer mid-week, as some Fed officials talked of tightening monetary policy. The job report added strength to the currency. However, the greenback real power may not materialize unless the Fed starts withdrawing stimulus, giving away the present-time only talkative mood.
BEARISH TRIGGERS
The valuable gains with SPX500 have another side, and as far as the U.S. stocks rally goes further, the solid awaiting correction becomes more evident. Global investors are cautious and seek safer money markets and bond funds. The latter received 14.6 billion USD last week, twice the inflows with the last week of July.
Although four of the 11 major SPX500 sectors closed with good gains, the fears of higher inflation haven't stepped aside. The focus will be turned to a meeting of Fed's leaders later this month to discuss policy and decide further stimulus strategy.
Currencies
MARKET VIEW
Weekly changes: EURUSD -0.88%, GBPUSD -0.14%, USDJPY +0.58%, AUDUSD +0.31%
The EURUSD pair fell and closed the week at 1.17593, pressured by weaker-than-expected German industrial orders data.
The GBPUSD pair has been a strong performer during the past weeks. However, it fell after the good U.S. payroll data and finished Friday at 1.38663.
The USDJPY pair finished the week bullish at 110.205. In light of all events, the pair has yet room to go further.
The AUDUSD pair declined with the week's final price at 0.73499. The RBA published its recent meeting minutes with the decisions to maintain the financial support.
BULLISH TRIGGERS
The major central banks are divided into two camps now. With the USA and the U.K. likely to raise rates in the coming year or two, the eurozone and Japan are not. In this case, USDJPY looks like the most prolific currency pair among the majors.
The BoE said its first rate increase is now expected in late 2022. After the two rate hikes, the regulator will start ‘quantitative tightening’, the way the Fed did back in 2017. The pound may outperform the euro and the yen in this case. The RBA stated it would not raise the rate until at least 2024. AUDUSD declined after that but remained at the positive territory within the week terms.
BEARISH TRIGGERS
Unlike the Fed, the ECB doesn't seem to move towards higher rates. So EURUSD will remain pressured in this case.
Three weeks ago, AUDUSD touched this year's low of 0.72900 and rebounded. The current price at 0.73500 area and all the recent events show the continuing decline of the pair towards the reached minimums.
Gold
MARKET VIEW
Weekly changes: XAUUSD -2.93%
XAUUSD slid to 1,763 USD on Friday, its lowest in over a month. The drop happened after the strong U.S. jobs report increased expectations, and the Federal Reserve could begin tapering its economic support sooner than previously anticipated.
The job numbers are hitting gold because the market is anticipating that the Fed’s tapering will happen earlier than expected with an announcement in September and the actual tapering probably in early January.
BULLISH TRIGGERS
Gold has fallen to technically important levels, so a correction rebound is possible. A tremendous amount of support is getting pumped into the global economy, which still should support gold.
BEARISH TRIGGERS
Greenback strengthened after the U.S. NFP rise of 943,000 in July. Higher Fed interest rates boost the opportunity cost of holding non-interest-bearing gold.
Oil
MARKET VIEW
Weekly changes: XBRUSD -6.04%
After reaching 75.30 USD, XBRUSD fell to 69.96 USD by Friday in the biggest weekly decline in months on oil demand worries. Traders think that travel restrictions to curb the spread of the Delta variant of COVID-19 will decrease the global recovery in fuel demand.
BULLISH TRIGGERS
U.S. gasoline inventories fell by a bigger-than-forecast 5.3 million barrels. Saudi Arabia raised its September official selling prices for crude oil for Asian buyers to a four-month high.
BEARISH TRIGGERS
Rising coronavirus cases in top consumers U.S. and China weigh on oil prices. Japan reported new cases in Tokyo. Moreover, some experts predict that the emergency measures in Tokyo will be applied nationwide. In contrast, the U.S. oil rigs rose to 387 this week. The U.S. dollar became stronger after the upbeat numbers of Nonfarm payrolls.
Cryptocurrencies
MARKET VIEW
Weekly changes: BTCUSD +8.07%
Last week, BTCUSD rebounded from 37,600 USD and reached nearly 45,000 USD on 8 August. The capitalization of bitcoin is 846 billion USD now, according to CoinGecko. Some analytics think that breaking 45,000 USD gives every reason to believe that the market is entering a new bullish cycle.
BULLISH TRIGGERS
News about SpaceX investments in the main cryptocurrency and the integration of the digital coin into the social network Twitter affected it positively. The successful release of the London hard fork in the Ethereum network, which launched the mechanism for burning digital coins, also contributes to the bullish mood of the entire market. The negative background created by global regulators and the Chinese authorities regarding digital assets decreases gradually affected by positive news.
BEARISH TRIGGERS
On 21 July, SEC Chairman Gary Gensler draw attention to the need to regulate tokens and stable coins that are ensured by securities. According to the head of the SEC, all of them are under the regulator's jurisdiction. Any offer of a derivative for cryptocurrency has to be registered with the Securities Act of 1933. Supporters of strict regulation by the financial authorities and the 'greens' are against cryptocurrencies in the United States.
Upcoming news
This week all focus will be on the USA Core CPI. Also, Germany will issue its ZEW economic survey and the Harmonized Index of Consumer Prices. The UK and Japan will both release their GDP data.
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