This week saw some mixed risk flows as the market showed some indecision. This year’s rise in US equities took a pause midweek as a rotation out of tech stocks saw the Nasdaq fall, alongside the S&P500 and the Dow Jones, through a key daily trend line midweek. Fed Powell’s testimony to the US Congress maintained a sufficiently dovish outlook, but the US10 year yields rose again on Wednesday to start the US session. A fast rise in US 10 year yields is a possible headwind for US stocks. Therefore, expect the pace of US 10 year yields to be in focus again next week and a fast rise to keep stocks pressured.

Other key events from the past week

  • NZD: Interest rate, Feb 24. The RBNZ kept interest rates unchanged and the LSAP purchases remain at $100 billion. However, the RBNZ was unable to paint a sufficiently dovish picture to discourage NZD buyers out of the event. Catch up on all the latest central bank analysis.
  • USD: Fed’s dovish stance remains, Feb 23. The Fed’s chairman, Jerome Powell, stated that the US economy was still a long way from employment and inflation goals. There was no indication the Fed would shift from its already stated very dovish outlook which provided some support for US stocks on Tuesday.
  • BTCUSD: Bitcoin falls 12%, Feb 23. BTCUSD fell 12% on Tuesday as tech stocks fell on a rotation out of the so called ‘stay at home’ stocks (Tesla fell over 13% ). The medium-term outlook for BTCUSD remains to the upside with significant institutional demand expected. $42,000 is a key level of daily support

Key events for the coming week

  • AUD: Interest rate, Mar 02. The RBA meets next week and no change in interest rate is expected. However, it will be all about the statement. Any indication that the RBA is bringing interest rate hikes forward in time will boost the AUD. View the last report on the RBA minutes.
  • Oil: Crude bull run to end? Mar 04. Rising crude prices face a challenge from OPEC. Saudi wants to keep production cuts (supporting oil), but Russia wants to reduce them (weakening oil). This meeting will determine near term oil prices.
  • US: Labour data, Mar 05. A strong NFP print this week may pressure the Fed to start to talk about bond tapering. Expect a stronger than expected print to support US 10 year yields, strengthen the dollar and weakening gold.