Three markets to watch next week (18.08.2023)

This week brought a lot of negative sentiment to the financial markets. Evergrande has filed for bankruptcy protection in a US court - the second-largest property developer in China heightened uncertainty about the Chinese economy and its actual slowdown. Meanwhile, FOMC minutes and strong US economic data increased the likelihood of another interest rate hike by the Fed. Next week, investors await further significant events, making it worthwhile to keep an eye on US500, EURUSD, and Bitcoin.

US500

This week, US500 broke down a key upward trend line that had been established a few months ago. Next week, it will be important to watch for statements from FOMC members, as they might shed more light on the Fed's monetary policy in the coming months. If the statements are hawkish and the necessity for rate hikes is clearly communicated, Wall Street indices might experience another downward correction. From the macroeconomic data, investors will learn about the PMI report, which will show how deeply the American economy remains in the contraction zone.

EURUSD

Market panic and increased recession risk triggered capital flight from risky assets. Consequently, the dollar gained significantly against most currencies of developed countries. EURUSD is heading towards a resistance zone around 1.081, and this week, it might approach that level following comments from Fed members.

Bitcoin

This week, there was a sharp panic and sell-off in the cryptocurrency market. Low liquidity combined with several catalysts led to the liquidation of long positions valued at a record 1 billion USD. Investors should monitor if the key support levels at 25,200 and 24,100 are not breached. Otherwise, a bounce in the BTC price might occur, returning to higher levels.