US Dollar, Euro, British Pound, Gold, Dow Jones, Fed, ECB, BoE

Body:

Global market sentiment continued improving this past week. On Wall Street, the Nasdaq 100, S&P 500 and Dow Jones gained 4.32%, 2.47%, and 1.81%, respectively. Across the Atlantic Ocean, the German DAX 40 gained 0.77%. Meanwhile, in the Asia-Pacific region, the Nikkei 225 and Hang Seng Index rose 3.12% and 5.15%, respectively.

Global financial conditions continue easing, helping restore liquidity in the market even though the Federal Reserve is still hiking rates and unwinding its balance sheet. As such, the US Dollar is feeling the pain and had another lackluster week – see the chart below. Gold prices have also been gaining, albeit momentum has faded over the past couple of weeks.

A notable standout last week was the Australian Dollar. Higher-than-expected fourth-quarter inflation boosted hawkish RBA policy expectations, pushing AUD/USD higher. The sentiment-linked currency is also benefiting from the improvement in risk appetite. The similarly behaving New Zealand Dollar also rose this past week.

Ahead, all eyes turn to the FOMC rate decision on Wednesday. The pace of tightening is expected to slow to 25 basis points. But, what traders will be caring about is how the central bank’s outlook evolves relative to market pricing. The market appears more dovish than the Fed, setting the stage for disappointment.

Other notable event risks in the week ahead include January’s US non-farm payrolls report as markets continue gauging the health of the economy. The BoE and ECB rate decisions are also due for the British Pound and Euro, respectively. China releases manufacturing PMI for AUD/USD. What else is in store for markets in the week ahead?

How Markets Performed – Week of 1/23

Fundamental Forecasts:

S&P 500 and Nasdaq 100: Get Ready for an Event Packed Week Ahead

US equity market traders will be looking forward to next week’s action-packed data and earnings calendar and all the volatility it brings with it.

GBP Weekly Outlook: BoE & Fed to Dictate Pound Sentiment

GBP/USD is trading at a key inflection point with next week’s BoE and Fed rate decision to act as catalysts for short/medium-term directional bias.

Dollar is Volatility Bound with FOMC, NFPs and Earnings…But Is There a Trend?

The US Dollar is facing a very high probability of volatility and a breakout from an extremely tight range out of necessity. However, that doesn’t guarantee that what we absorb will lead to a definitive trend. Here are the stakes for the Greenback with the Fed rate decision, top US earnings and nonfarm payrolls on tap.

WTI Oil Fundamental Forecast: Short-Term Outlook Promising with Key Risk Events in the Week Ahead

WTI technicals and fundamentals eyeing further gains. Will the major risk events next week dent sentiment and stem the bullish momentum?

Weekly Euro Forecast: ECB Hike Priced in and Has Core Inflation Peaked?

The ECB unite, signaling multiple 50 bps hikes as core inflation proves sticky thus far, and the economic outlook for Europe is improving as a gas shortage has been avoided.

Gold Price Forecast: Easing Financial Conditions Leave the Fed in a Tricky Spot

Gold prices might fall if the Federal Reserve disappoints dovish market expectations that have led to easing financial conditions before inflation is back to target.

Technical Forecasts:

US Dollar Technical Forecast: USD Support Test Into a Heavy Week of Data

The US Dollar took four months to wipe out 50% of a trend that took almost two years to build, but prices has been lodged at that half-way point now for two weeks. That will probably change next week.

S&P 500 and NASDAQ 100 INDEX Technical Outlook: Turning Bullish

Developments on the charts suggest US equity indices could be preparing for a break higher, raising the prospect that the worst could be over for now. What is the outlook on the S&P 500 index and the Nasdaq 100 index and what are the levels to watch?

Dollar Yen Forecast: USD/JPY Remains Conflicted Around 130.000

USD/JPY is currently trading in a narrow zone of support and resistance around the psychological level of 130.000. Is this the calm before the storm?

— Article Body Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com

— Individual Articles Composed by DailyFX Team Members

To contact Daniel, follow him on Twitter:@ddubrovskyFX