The global risk appetite improved in the first week of March. The Dow Jones saw an uptick of 1.79% in the US, while the S&P followed suit with a 1.86% increase. In Europe, the Dax 40 increased by 2.59%, while the FTSE of London was up 0.46%.
The Nikkei 225 gained 1.73% in Asia, while the Hang Seng index rose 2.79%. However, the uptick in mood meant a disappointing start to the month for safe-haven assets like USD and gold.
In the coming week, investors will be anticipating various central banks to give indications on rate hikes, including the Australian Central Bank, Bank of Canada, and the Bank of Japan. The recent uptick in inflation numbers may be stickier than first anticipated, with rates continuing to rise for over a year.
At the end of the next week, we will have more data in the form of US NFP. Investors hope to have a clearer direction as the week proceeds with unsustainable current flux positions.
Fundamental Forecasts for The Week
The direction of the EUR/USD pair will depend on Jerome Powell’s comments as investors remain on the fence about potential rate hikes by the Fed. Some analysts see the potential for rate hikes deep into 2023, as the current inflation numbers have become very discouraging.
The GBP/USD pair is bracing for price volatility in the coming week as the release of NFP data, and Jerome’s comments will send the economy into a frenzy as investors digest the news.
The slide in the AUD has halted due to strong Chinese manufacturing and services data. These developments could trigger a sustainable rebound in the pair.
US Dollar Weekly Predictions
The dollar may increase if the NFP shows a tight labor market amid inflation pressures causing the Federal Reserve to remain on the upward trend longer.
The USD/CAD pair will move cautiously as the week progresses ahead of a busy data week. Canada has halted rate hikes as its economy shows resilience, but external pressures could weigh on the pair and drag it down.
The major indices, including the Dow Jones, Nasdaq, and S&P 500, may experience volatility. The earlier rally could be reversed if the labor market data beats estimates and strengthens expectations for Fed rate hikes.
Gold is on the path of a big comeback after massive sell-offs in February. If the metal closes above 1833, the recent advance by the pair will turn positive.
Overall, the week will be busy with investors looking forward to massive data globally to make decisions. In addition, the current geopolitical tensions between China and the US drive economic downturns.