Fawad Razaqzada

So far, we have only seen the euro show any signs of strength apart from those where interest rates are lower – JPY, CHF and CNH. The broader US dollar forecast should turn more negative once the equity markets shown signs of stabilisation light of the sharp repricing of US interest rates.

On Friday, we saw bond yields dip sharply post a disappointing US jobs report. Surprisingly, this did not bolster gold prices as expected. Despite climbing to a weekly high, gold then reversed and dropped.

There is one more macro even left that could provide even more volatility in the markets, namely the ISM services PMI on Monday. I reckon once the equity market volatility settles, the recent weakness in US data should translate into a more widespread dollar weakness. So, I maintain a bearish dollar forecast for the week ahead, especially now that we have seen a weaker jobs report today.

Following the big tech-fuelled rally on Wall Street, the major US indices fell back, with the Nasdaq 100 being down about 2.5% at the time of writing. We had a number of weaker-than-expected US economic reports, in particular the ISM services PMI, while mixed technology earnings results and a more hawkish Federal Reserve and Bank of England policy decisions (and not forgetting the Bank of Japan), all weighed on risk appetite.

The FTSE was unable to add to its gains from the day before, after the Bank of England cut rates by 25 basis points in a close decision that, on balance, appeared less dovish than the vote split would have had you believed. A sharp drop in Japanese shares overnight dented investor confidence somewhat, which came hot on the heels of a technology-fuelled rally on Wall Street on Wednesday.

Today's gains were largely driven Nvidia’s 11% surge, as beaten-down chipmakers rallied. Meanwhile, softer economic data further boosted bets that the Fed will signal a rate cut in September, with the potential for two more cuts being priced in before the year is out. The Nasdaq 100 forecast remains bullish from a technical point of view with the index holding above a key bullish trend line.