Three markets to watch next week (09.06.2023)

Next week will start relatively quietly, as no significant macroeconomic data is scheduled for publication. However, investors await Tuesday's US CPI data, which could provide the Federal Reserve with the final piece of evidence needed for their interest rate decision on Wednesday. Later in the week, the release of regional indicators from the US - specifically, the NY Empire State Manufacturing Index and the Philadelphia Fed Manufacturing Index - will be closely watched. Key markets to keep an eye on next week include the US500, GOLD, and EURUSD.

Gold

Gold has been struggling to climb back above the $2,000 per ounce mark recently. With two major central banks - the Federal Reserve and the European Central Bank - set to make interest rate decisions, the forward guidance will be crucial. Any indication that the rate hike cycle is nearing its end or is about to pause could significantly influence gold's trajectory. Conversely, hawkish guidance could weigh on precious metals and potentially exacerbate the recent pullback. The critical support level to monitor for gold is around $1,920 per ounce.

EURUSD

The EURUSD currency pair may see heightened volatility next week. A series of top-tier US macroeconomic reports scheduled for Tuesday and Wednesday will likely impact EURUSD. A hawkish stance from the Federal Reserve on Tuesday could bolster the dollar in the short term, exerting downward pressure on EURUSD. However, an anticipated interest rate hike from the ECB on Wednesday could support the euro. Analysts predict that equilibrium could be found around the 1.06/1.07 range. Moreover, the pair could also experience movement on Thursday following the release of the NY Empire State Manufacturing Index, the Philadelphia Fed Manufacturing Index, and jobless claims data.

US500

Increased volatility is expected on indices next week. The US500 has broken above a critical support zone as investors anticipate the end of the rate hike cycle and no change in interest rates at this week's FOMC meeting. If the Federal Reserve explicitly communicates that the rate hike cycle is not yet over, the US500 could see a deeper correction. On the other hand, if the end of the rate hike cycle is announced, this could trigger another upward move on the US500, potentially leading to euphoria-type movements. Following the Federal Reserve's interest rate decision, regional indicators from the US economy are scheduled for release the next day. These could provide insights into the current state of the US economy and give investors a better idea of whether we are about to enter a prolonged contraction period.