S&P 500, Gold, USD; Fed, ECB, BoJ, Germany ZEW, UK & Australia Jobs, US CPI, China Retail Sales

Global stock markets rose to a 13-month high amid improved sentiment after the recent suspension of the US debt ceiling, the resilience of the global economy, and hopes that US interest rates are peaking.

The MSCI All Country World Index rose 0.6%, the S&P 500 advanced 0.4%, and the Nasdaq 100 was mostly flat. Germany’s DAX 40 and Britain’s FTSE 100 fell 0.6%. In Asia, the Hang Seng advanced 2.3%, while Japan’s Nikkei 225 advanced 2.2%. Risk-sensitive currencies, including the Australian and New Zealand dollars, rose on the week.

Market performance in the past week

Source data: Bloomberg; The graph was prepared in Microsoft Excel.

Note: The global bond proxy used is the Bloomberg Global Total Return Unhedged IndexAmerican dollar; The Commodity Agent used is BBG Commodity Total Return; The hedge fund agent used is HFRX Global Hedge Fund Index.

While the overall data calendar last week was relatively subdued, the surprise rate hikes by the Reserve Bank of Australia and the Bank of Canada highlighted that inflation, while moderate at a core level, remains well above central banks’ target. This highlights the meetings of the US Federal Reserve, European Central Bank (ECB), and Bank of Japan (BoJ) next week.

The market is now pricing in about a 70% chance of a stall at the FOMC meeting on June 13-14, compared to 35% a week ago, after several Fed officials including the vice chair-designate indicated a “skip” in June. Still, it could be a close call, especially if US CPI data on Tuesday comes out higher than expected. The market expects core CPI to decline to 4.1% yoy in May from 4.9% in April; Core CPI will hold steady at 0.4% MoM. Even if the Fed decides to pause next week, Fed officials have made clear that any decision to keep interest rates steady should not be seen as the end of the tightening cycle.

The European Central Bank is widely expected to raise its benchmark interest rate by 25 basis points at its meeting on Thursday and again in July, but the Bank of Japan may remain on hold. At its previous meeting in April, the Bank of Japan maintained its ultra-accommodative policy given the uncertain outlook on the economy and inflation.

Besides the three central bank meetings, data on new Chinese yuan loans are scheduled for release on Monday. Australian Westpac Consumer Confidence for June, German May Inflation and ZEW Economic Sentiment, UK Jobs and US CPI data are due on Tuesday. UK April GDP and manufacturing, Eurozone April industrial production, and US PPI data are due on Wednesday. Thursday is scheduled for the US Federal Open Market Committee meeting, the European Central Bank meeting, jobs data in Australia, New Zealand’s GDP for the first quarter, China’s fixed asset investment and retail sales, US industrial production and retail sales for May. The Bank of Japan interest rate decision and US consumer confidence data are due in Michigan on Friday.

Forecasting:

Euro Outlook: EUR/USD Amid Thin Ice Ahead of the Fed’s Decision, the ECB is unlikely to tip the scales

US inflation data, the Federal Reserve’s interest rate decision and the European Central Bank’s monetary policy announcement will take center stage next week and guide EUR/USD’s near-term path.

Latest British Pound – GBP/USD and EUR/GBP highlight GBP’s strength

The British Pound is pushing through a previous resistance level against the US Dollar while EUR/GBP hit a low last seen in late August.

Australian Dollar Forecast: The RBA Makes the Cut, Will the Fed Do It?

The Australian dollar continued to recover towards the end of last week after the sudden rally by the Reserve Bank of Australia. The Fed is now moving around the scene and may lead to some volatility. Before.

Gold Weekly Forecast: Gold prices (XAU/USD0) are heading precisely towards a choppy week

A pivotal week is coming not only for gold prices but for the markets as a whole. Will the FOMC meeting see gold return to the $2000 level or will the long awaited retest of $1900 finally materialize?

Crude oil prices are looking to US data for guidance as OPEC news fades

Crude oil prices are shifting attention towards the US due to the short-term directional bias coming from a quiet week of trading.

S&P 500, next week on Nasdaq: Tesla pushes US stocks into a new bull market

Tesla’s deal with GM sent shares up 4.5% in the premarket, catapulting the index into a fresh bull market. The Federal Reserve Committee on US Inflation and Interest Rates next week.

USD Weekly Outlook: DXY turns to inflation data and then Fed headlines

The US Dollar weakened last week heading into critical inflation data and the Federal Reserve’s monetary policy decision. Is the central bank hinting at further tightening after an expected pause?

– Text of the article by Manish Gradi, Strategist for DailyFX.com

— Individual articles written by members of the DailyFX team

Connect with Jaradi and follow her on Twitter: @JaradiManish