Markets Week Ahead: FOMC, Apple, Amazon, USD/JPY, Gold, and USD Outlooks

by Nick Cawley, Senior Strategist

FOMC and NFPs will drive the US dollar next week.
Apple and Amazon are the next Mag 7s to report.
USD/JPY pushing further into the danger zone.

It was a risk-on week for most markets as hostilities between Israel and Iran took a back seat for the Passover holiday. Iran’s recent drone attack on Israel now seems in the rearview mirror although with Israel still talking about further retribution, the current calm may not last for too much longer. The daily VIX chart highlights last week’s risk-on sentiment with the Friday 19th multi-month high of 21.36 sold off heavily. The VIX ended the week at 15.03.

VIX DAILY CHART

Next week’s economic calendar includes Euro Area and German GDP and inflation releases, US ISM reports, the monthly US Jobs Report, and the latest FOMC monetary policy decision. The Fed is expected to leave interest rates unchanged and is now unlikely to cut borrowing costs until Q4 as inflation remains elevated and sticky. At the end of 2023, markets were pricing in around 170 basis points of cuts this year, the current pricing shows just 31 basis points.

The tech reporting season is in full flow and next week sees both Amazon and Apple open their books. Last week’s reports produced some volatile price action. Tesla missed expectations and its share price rallied 10%+, Meta beat forecast but slumped by over 12%, Amazon jumped by 10% while the world’s largest company, Microsoft, added nearly 3%. Along with Amazon and Apple, other notable companies releasing their earnings include AMC, Pfizer, Moderna, Block and Coinbase.

The Japanese Yen continues to weaken and is trading at uncomfortable levels for the Bank of Japan and a host of other central banks. It is very likely that the current level around 158.30 will soon push the MoF and BoJ into action to strengthen their currency. Friday’s sharp rally could be reversed before 160 becomes a reality next week.

USD/JPY DAILY PRICE CHART

The FTSE is up over 5% since April 19th, driven higher by a weak Sterling, increased M&A activity, and a general re-rating of the index. With all three drivers unlikely to change over the coming weeks, the UK 100 is set to push higher.