Markets in Asia began the week subdued despite markets stateside closing at record levels last week. Looking to the week ahead, market participants await key data releases including Chinese trade data as well as CPI and Retail Sales from the US.
Within Europe, rising Covid-19 cases continue to threaten the bloc’s recovery attempts as German Chancellor Merkel’s coalition begins to draft legislation to transfer authority to impose restrictions back to the Federal Government from regional leaders. A fresh lockdown is due to be imposed which will see all non-essential retail stores close. Across the channel, the UK transitioned into the next phase of the easing blueprint as non-essential retail, pubs and sporting facilities will reopen today. This comes as the UK continues to plough ahead with their vaccination rollout which has seen over half of the population vaccinated at least once. With footfall set to increase over the next few months, businesses will be eager to welcome customers after having endured another shutdown over the past three months. Within markets, last week saw Sterling slide across the board as the FTSE100 broke to new monthly highs breaching the 6,900 handle. The index still lags behind most major indices having not recovered from its pandemic drop.
Fed Chair Powell continued with his dovish stance last week as he outlined that the US economy is now at an ‘inflection point’. The Fed Chair pointed to the fact that the risk to the economy still remains the resurgence of the virus whilst reiterating that reopening too quickly could do more harm than good. Equity indices continues to digest the overwhelming optimism as the S&P 500 led the charge to close above the 4,100 level for the first time ever.
Oil markets traded cautiously last week as participants continued to digest Covid-19 related headlines as well as supply related catalysts. Demand for the commodity has slowed over the past three weeks as jitters arise among the EU’s largest members due to the virus. Morgan Stanley have also decided to exit their long Brent idea after having revised their Q3 price forecast to $65-70/bbl. from a previous estimate of $70/bbl. The decision made cites a potential quicker return of Iranian exports and a continued increase in US drilling activity.
Crypto markets benefited from weekend trading as assets attempted to breakout to the upside. Bitcoin currently holds above the $60,000 level after gaining around 3% in the week prior. On the other hand, Binance Coin, XRP and LTC produced in double- and triple-digit gains last week.
Here is a breakdown of the High impact data releases this week.
15:00 BOC Business Outlook Survey. Markets to watch: CAD Crosses
13:30 CPI and Core CPI m/m. Markets to watch: USD Crosses
03:00 RBNZ Rate Statement. Markets to watch: NZD Crosses
17:00 Fed Chair Powell Speaks. Markets to watch: USD Crosses
02:30 Employment Change & Unemployment Rate. Markets to watch: AUD Crosses
13:30 Core Retail Sales & Retail Sales m/m. Markets to watch: USD Crosses
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