Three markets to watch next week (05.02.2021)

8:02 PM February 5, 2021

Stock markets recovered from declines and marched towards fresh record highs. Retail speculative frenzy has faded and markets refocused on issues like US stimulus. While coronavirus pandemic is still far from over, markets no longer seem to care about it. 

USDJPY

US dollar has been recovering for over a month already. The Federal Reserve has rejected the idea that QE taper may be coming anytime soon and stress that central banks' goals are still far away. However, inflation pressures start to build up in the economy. US CPI reading for January will be released on Wednesday at 1:30 pm GMT. Market consensus points to an acceleration from 1.4 to 1.5% YoY. While price growth remains still below Fed's target, continued pick-up may revive discussions over monetary tightening.

US500

US500 and US100 reached fresh record highs this week as uncertainty faded along with retail speculative frenzy. Stimulus talks in the United States continue to gather momentum and it is just a matter of time when an economic relief deal worth over $1 trillion is approved. The question remains what will be the next driver for the markets? Or are we set to see some "buy the rumour, sell the fact", should no such driver arise?

DE30

DE30 broke above 14,000 pts on Friday following a steep week-long rally. Investors continue to look past the coronavirus pandemic and focus on a bright outlook for the economy after the virus is defeated. Meanwhile, Chancellor Angela Merkel is expected to hold talks with state leaders on Wednesday on yet another extension of coronavirus restrictions. Will investors continue with a habit of ignoring bad news should talks conclude with recommendation of extension, or will markets realize that pandemic is still far from over amid vaccination delays?

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