EU Wrap: Big earnings week, Fed, data, oil, gold, Bitcoin surge

A cautious start to the week as investors prepare for an onslaught of earnings and data, not to mention the Fed meeting on Wednesday.

It should be a thrilling week and it comes on the back of a hugely impressive bounceback. Last Monday it was all doom and gloom, this week it's very different. Earnings season is off to a great start and the tech giants are in town this week so it promises to be an exciting one.

If that wasn't enough, the Fed meeting on Wednesday is hotly anticipated as investors look for clues as to when the central bank will start to unwind its crisis response to the pandemic.

Add to all of this a collection of big economic figures - advance GDP, PCE inflation, personal income and spending, among others - and we have quite the week on our hands. It's hardly surprising that we're seeing a little caution, especially against the backdrop of a four day rally and fresh record highs.

As is so often the case, Monday is the calm before the storm. The action may not really get underway until after the close on Tuesday when Apple and Alphabet report, but then things will pick up dramatically going through to the end of the week. At which point we'll probably all need a good rest.

Oil steady after strong fight back

Oil prices are a little flat, in line with the broader markets, after enjoying a bumper recovery last week. After falling heavily a week ago, WTI made strong gains over the following days to move back above $70 and close out the week higher than it opened. Despite a little softness earlier in the session, we're now back around those levels once again.

Risk appetite has clearly massively improved over the last week and just like other risk assets, oil is taking a breather ahead of an intense few days. The second quarter recovery has got pulses racing at the prospect of what's to come. The next wave of Covid is a downside risk to that but not to the extent that the previous surges have. Optimism is still strong and for good reason.

Gold consolidates ahead of Fed

Gold remains very much in consolidation mode as it continues to hover around $1,800. The yellow metal was one of last weeks losers but it didn't suffer too much considering the dramatic improvement in risk appetite. Yields have risen but from very low levels and while optimism is growing around the economy as we exit the pandemic in the coming quarters, inflation is still widely being viewed as transitory meaning central banks are in no rush to remove the stabilizers. I guess we'll know a lot more about this from the Fed's perspective in a couple of days.

Bitcoin higher as short covering triggers surge

Bitcoin is flying once again and it would appear the credit is going to Amazon, or more specifically a job posting at the company related digital currency and blockchain strategy. What that actually means is anyone's guess but what it does do is excite crypto enthusiasts and gets the rumour mill pumping.

The job posting can't take all the credit though. Elon Musk last week did a fine job of dragging cryptos off their lows with his disclosures around personal holdings and the possible future of Tesla transactions, so things were already looking up. And it seems some significant short covering is taking place as bearish traders have seen the writing on the wall and rushed to the exits, after seeing what bitcoin can do when the bulls take control. It promises to be another interesting week for the space.