Week Ahead: Nvidia’s earnings will be crucial for the forex markets.

Earnings of Nvidia will be crucial for the stock markets this week as they climb to new highs. Judging by the results of its supplier, TSMC, it seems a new record is on the way, as earnings are expected to be strong enough to justify the high valuations.

U.S. government bonds are exposed to risks if GDP and consumer spending data show better-than-expected results. Following a strong rise over the past month, the vulnerability of the bond market is increasing. The Federal Reserve has confirmed that there will be a rate cut, but the exact path remains unclear, putting the aggressive rate cut bets at risk. The second GDP estimate is likely to confirm that the soft slowdown remains in place, while the Fed’s preferred price index is expected to highlight inflationary resilience. This will reinforce the Fed’s recent statements on a cautious approach, amid bets for a 100 basis points cut by the end of the year.

European bonds are also vulnerable if eurozone inflation data create obstacles for ECB rate cuts. The central bank’s chief economist emphasized the need to maintain restrictive interest rates to achieve the inflation target. Focus will remain on service sector inflation and wage growth, leaving traders exposed to any increases in these numbers.

The yen is poised to rise towards the highs observed earlier in the month as activity data shows that BOJ targets are on track. Governor Kazuo Ueda has clearly stated that rate increases will continue while data aligns with policymakers’ goals. While the Fed’s path is important for the yen, domestic dynamics are becoming increasingly significant.

The Australian dollar will continue to rise if price data confirm the RBA’s hawkish stance. The Reserve Bank of Australia has consistently positioned itself as one of the last to consider rate cuts, limiting the currency’s decline. Although the Australian dollar remains vulnerable to any disruptions in risk appetite and China’s growth, the central bank’s firm stance provides support.