Global Market Outlook: Central Bankers’ Impact on Markets
The global market outlook for the week commencing January 22nd is heavily influenced by the actions and statements of central bankers. With the US equities market reaching new all-time highs, investors are closely watching the movements of central banks around the world.
US equities, particularly the S&P 500 and the Dow Jones, have been on an upward trajectory, driven by strong performances from big tech stocks. The “Magnificent Seven” companies, including Microsoft, dominate the S&P 500 and their strong Q4 earnings results are expected to further boost US indices.
Meanwhile, the US dollar has had a strong start to the year as Federal Reserve members push back against overly bullish interest rate cut expectations. This has led to a rise in US Treasury yields, strengthening the US dollar against other currencies. However, this has put pressure on precious metals, with gold testing the $2,000/oz level twice this week.
Looking ahead, next week’s economic docket is filled with high-importance data releases and events. The Bank of Japan’s Quarterly Outlook Report will be closely monitored, especially with USD/JPY at elevated levels. Additionally, the European Central Bank’s policy decision on Thursday and the US core PCE release on Friday will be the main attractions of the week.
In terms of specific currency forecasts, the British Pound has shown resilience to economic shocks due to unchanged interest-rate views. The Euro’s outlook will largely depend on the ECB policy meeting, where President Christine Lagarde may provide guidance on a rate cut timetable. Gold and silver face headwinds due to tempered rate cut bets and renewed strength in the US dollar and yields.
Overall, investors are advised to closely monitor central bank actions and statements, as they have a significant impact on global markets. The week ahead promises to be eventful, with various economic data releases and central bank decisions shaping market trends.
Disclaimer: This article was written by DailyFX analysts and strategists. The views and opinions expressed herein are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.