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The Week Ahead: Can market sentiment stay positive this week?

We start the week on a very positive note for risk. After good gains for US share markets on Friday night and another record high for the S&P 500, we’re looking at another similar positive move to open Asia-Pacific trading here today.  

We also saw very good gains for industrial commodities, with crude oil prices up around 4% and base metals making impressive gains, as with copper and aluminum up around 2%, and that risk-on mode and enthusiasm for growth-exposed markets could flow through into Asia-Pacific trading today.  

Even though it’s a shorter week with the Easter holiday coming up in many nations, we do have a lot of data coming out this week. We will see reads on major economies, inflation in Europe China PMIs all through the week, and Friday night’s non-farm payrolls in the US. Now all these reads could be very important, remembering our current sensitivity to inflation, interest rates and growth prospects.

We’ll also be concerned potentially with monthly and quarter-end effects. In the middle of this week, we’ll see that end of quarter and for those institutional investors exposed to reporting on a monthly or quarterly basis, we might see action to reverse some of the gains we’ve seen over the quarter for key stock markets.  

We’ll also be watching aussie/yen very closely this week. The AUD/JPY pair is considered a strong sentiment indicator, with the commodity and growth -exposed Australian dollar at one end, and the safe-haven on the other. After some very good gains since mid-October, AUD/JPY has stalled over the last couple of weeks and might be describing a head and shoulders reversal pattern, suggesting a fall for the aussie/yen and potentially global growth sentiment with it. If on the other hand, we see AUD/JPY gain a stable footing and move to fresher highs, it would be a sign that sentiment is recovering. To see the AUD/JPY chart, log in to our Next Generation platform 

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