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Gold in Record Zone as Dow Breaks Out; EUR/USD, USD/JPY Eye NFP

Volatility spiked across many assets last week, producing notable breakouts and breakdowns in the process. First off, U.S. Treasury yields plummeted across the board, with the 2-year yield sinking below its 200-day simple moving average and reaching its lowest level since early June at 4.54%.

Falling U.S. bond yields, coupled with bullish sentiment on Wall Street, boosted stocks, pushing the Dow Jones 30 above its July peak and close to its all-time high. The Nasdaq 100 also advanced, but failed to take out overhead resistance near 16,100.

The market dynamics also benefited precious metals, triggering a strong rally among many of them. Gold spot prices, for example, rose by 3.5% and came within striking distance from overtaking its record near $2,075. Silver, meanwhile, gained 4.7%, closing at its best level since May.

In the FX space, USD/JPY plummeted 1.77% on the week, breaking below its 100-day simple moving average – a bearish technical signal that could portend further losses for the pair. EUR/USD, for its part, was largely flat, with lower-than-expected Eurozone inflation reducing the single currency’s appeal.

Looking ahead, if U.S. interest rate expectations continue to shift lower, U.S. yields are likely to come under further downward pressure, setting the stage for a weaker dollar. Against this backdrop, risk assets and precious metals could remain supported moving into 2024.

Upcoming U.S. data, including ISM services PMI and non-farm payrolls (NFP), will give us the opportunity to better assess the Fed’s monetary policy outlook. Soft economic figures could reinforce dovish expectations, while strong numbers could result in the unwinding of rate-cut bets. The latter scenario might induce a reversal in recent trends across key assets.

For a deeper dive into the catalysts that could guide financial markets and drive volatility in the coming trading sessions, explore the DailyFX’s carefully curated week-ahead forecasts.



Source: DailyFX Economic Calendar


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