The previous week brought turmoil regarding US debt to the markets, which visibly impacted the valuation of assets such as the dollar and gold. Despite the summer holiday mood, the end of August could feature higher volatility across global financial markets. Attention is focused on three key events: the Jackson Hole symposium starting on Thursday, Nvidia's earnings report on Wednesday, and the release of July PCE data for the US. In this context, investors should primarily observe markets such as US100 (Nasdaq 100 futures), gold (GOLD), and the USDJPY currency pair.
US100 (Nasdaq 100 fut.)
The index encompassing the key technology companies faces a fundamental test. Wednesday's Nvidia report will show whether demand for artificial intelligence solutions justifies its high valuation. The earnings of this company have repeatedly served as a market catalyst, setting the trend for all of Wall Street. Corporate results in the US have so far exceeded expectations, setting the bar very high for Nvidia. Any negative surprise could deepen the correction across the broader tech index.
Gold (GOLD)
The precious metal is regaining popularity among investors amid rising uncertainty. Turmoil in the US debt market served as a reminder of its role as a safe haven. The most important data points of the week will be Wednesday's report on US personal income and spending, alongside the preferred inflation measure of the Fed, the PCE index. It will reveal whether the Fed has room to pause interest rate hikes despite rising oil prices. A key moment will be Friday's speech by Fed Chair Kevin Warsh at Jackson Hole. The market will analyze his assessment of inflation, economic growth, and the future path of interest rates. However, it is worth keeping in mind Warsh's previous announcements regarding communication limits, which means the anticipated speech might not deliver explicit signals.
USDJPY
USDJPY remains one of the more volatile currency pairs amid turmoil in the bond market. Last week's issues with US debt only heightened the uncertainty stemming from rising yields in both the US and Japan. Wednesday's PCE inflation readings and Friday's speech by Kevin Warsh could directly impact the dollar valuation and bond yields. In the past, sharp shifts in Federal Reserve policy expectations often led to a rapid narrowing of the yield spread between the US and Japan, resulting in a sudden strengthening of the yen.
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