Nasdaq 100, S&P 500, gold price, US dollar, US CPI, earnings season

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Global market sentiment generally ended on a bullish note last week, but much of the upside progress was given up on the eve of the weekend. On Wall Street, Nasdaq 100, S&P 500 and Dow Jones futures gained 0.54%, 1.36% and 1.86% respectively. But, at one point, the tech-heavy Nasdaq rose nearly 6% before evaporating most of its advance.

The sharp reversal came on Friday in the wake of September’s U.S. nonfarm payrolls report. Not only did the country create more jobs than expected at 288,000, but the unemployment rate fell sharply to 3.5% from 3.7%. Admittedly, the labor force participation rate fell to 62.3% from 62.4% previously. All things considered, this indicated a still tight labor market.

This is not good news for the Federal Reserve, which is trying to bring down the highest inflation in 40 years. At the start of last week, markets were starting to price in even a rate hike in 2023. By late Friday, it was back on the table. The central bank’s balance sheet also continued to shrink, hitting its lowest level since December 2021.

Moving away from equity markets, WTI crude oil prices jumped 16.44% in the best week since Russia invaded Ukraine. OPEC+ has announced production cuts in the coming months to try to support prices that have been falling since May. Gold prices also ended higher for the week, but like stocks, most of the gains were pared ahead of the weekend.

Given the US labor market, all eyes are now on this week’s inflation report. Headline inflation is expected to fall to 8.1% year-on-year in September from 8.3% previously. Unfortunately for the Fed, the base gauge is expected to be at 6.5%, down from 6.3%. This latter issue is more pressing for the central bank, as prices are likely to continue to un-anchor from the long-term objective.

Another strong CPI report would likely continue to bring volatility to financial markets, pushing the US Dollar higher. This would also likely push Japan to continue to intervene in the markets to contain USD/JPY. For the British pound, the UK will release employment data. China also releases its CPI report. Earnings season begins with bank reports. What else is in store for financial markets over the coming week?

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Fundamental forecasts:

Directional fate of S&P 500, Dow Jones and Nasdaq tied to CPI after NFP selloff

US stock indices sold off on Friday after the US jobs report bolstered the odds of a 75 basis point FOMC rate hike. The direction of the market in the coming week depends on the US Consumer Price Index (CPI).

The EUR/USD rate is likely to rise further in the core CPI in the United States

US data releases may continue to influence EUR/USD as the Consumer Price Index (CPI) is expected to show persistent inflation.

Weekly British Pound Outlook: Pound distressed on its backside ahead of next week’s key data

The longer-term downtrend appears to be resuming for GBP/USD as key economic data points from the UK and US are due next week.

Gold price (XAU/USD) criticized by hawkish Fed and strong NFP report

Gold remains a US interest rate game for now with rising US Treasury yields pushing the precious metal lower after a strong US jobs report.

Australian Dollar Outlook: Dovish RBA sinks the currency

The RBA surprised markets last Tuesday by raising the benchmark rate target by 25 basis points to 2.60%, less than the expected 50 basis points, sending AUD/USD tumbling.

Bitcoin and Ethereum Predictions for the Week Ahead

Bitcoin and Ethereum continue to hold above year-to-date lows as the picture turns grimmer for risky assets.

Canadian Dollar Forecast: US Inflation Data Will Set USD/CAD Tone

The rally in oil prices should support the Canadian dollar, but the September US inflation report will likely be more relevant to the short-term direction of USD/CAD.

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Technical forecasts:

S&P 500, Nasdaq, Dow Jones Forecast for the coming week

A rebound at the start of the week aggressively faded on Friday and attention now turns to the next CPI report as a hawkish Fed continually reminds markets that they are not done yet.

US Dollar Technical Forecast: October US Dollar Battle Line Set – DXY Levels

Is the US dollar correction over? The stage is set and its decision time for the bulls in the days to come. The levels that matter on the DXY weekly technical chart.

U.S. Crude Oil Technical Forecast: OPEC+ Sets Up Major Trend Reversal

US crude is on track for five straight days of advances after OPEC+ decided to cut production from November. Aggressive rise highlights $93 and $100 as key levels

Japanese technical forecast for the week ahead: USD/JPY, AUD/JPY, CAD/JPY, EUR/JPY

The Japanese yen especially marked time last week. USD/JPY is closely watched by the Bank of Japan after intervention efforts to support the currency. Where to find AUD/JPY, CAD/JPY, EUR/JPY?

Gold and Silver Technical Outlook: Upside May Be Capped For Now

Gold managed to recoup some losses after breaking below major support last month. Silver continues to be within its well-established three-month range. What are the prospects and what are the key levels to monitor?

Canadian Dollar Technical Forecast: Technical data points to renewed downward pressure on the loonie

Can a hawkish Bank of Canada and rising oil prices help keep the Canadian dollar in the spotlight?

British Pound Analysis: GBP/USD Drops to Support US Dollar Rise

The British Pound (GBP) continued to suffer after a sharp decline that drove prices to a new all-time low at 1.035

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