PREVIOUS WEEK’S EVENTS (Week 15 – 19.07.2024)
U.S. Economy
U.S. retail sales were unchanged in June, a display of consumer resilience that bolstered economic growth prospects for the second quarter. It did not change expectations that the Federal Reserve could start cutting interest rates in September amid cooling inflation
Retail sales increased 2.3% on a year-on-year basis in June. After a period of high inflation, households are trading down and seeking cheaper alternatives, as evident in earnings reports from major retailers and manufacturers.
Australia Economy
Australian employment jumped well beyond expectations in June, yet the jobless rate still ticked higher as more people went looking for work, a mixed report that leaves open the question of whether interest rates need to rise further. The jobless rate still edged up to 4.1%, from 4.0%. Demand looks to be resilient and cost pressures could remain in place.
The RBA has held interest rates steady for five straight meetings now, but policymakers were pondering whether the current policy rate of 4.35% is restrictive enough as inflation remained high at 4% in the last quarter, above its target band of 2-3%.
U.K Economy
Retail sales volumes fell by more than expected in June. Sales volumes dropped by 1.2% last month after a 2.9% jump in May. While wages are now rising more quickly than inflation, it has slowed recently and held at the Bank of England’s 2% target last month.
However, underlying inflation pressures have diminished hopes among investors for an interest rate cut on Aug. 1, the date of the BoE’s next scheduled monetary policy announcement.
Canada Economy
Canadian retail sales fell by 0.8% in May from April led by lower sales at food and beverage retailers. Sales were likely down 0.3% in June, the agency said in a flash estimate. In May, sales were down in eight of nine subsectors, representing 73.1% of retail trade. In volume terms, retail sales decreased 0.7%.
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Inflation
U.K. Inflation
Inflation in the U.K. eased less than expected and a key core measure of prices barely dropped. The consumer price index (CPI) rose by 2.3% in the 12 months to April, down sharply from March’s 3.2% increase and its lowest since July 2021.
Services inflation – a gauge of domestic price pressure for the BoE which is also a problem in other European countries – was much higher than expected, and petrol prices rose.
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Interest Rates
ECB
The European Central Bank (ECB) kept interest rates unchanged as expected on Thursday but said September’s meeting and predicted that inflation would keep on falling. The ECB cut rates from record highs last month and the bank is proving more cautious about a follow-up step. Lagarde said growth was likely to have slowed in the second quarter and that investment activity along with poor industrial output point to muted expansion ahead. The comments reinforce expectations that weak activity will continue to suppress price pressures in the economy, allowing the ECB to cut rates further, perhaps once a quarter.
The September meeting will come at around the time that markets also see the U.S. Federal Reserve cutting. Markets are pricing in almost two ECB rate cuts for the rest of the year and a little more than five moves by the end of next year, a view no policymaker has openly challenged for weeks.
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Sources:
https://www.reuters.com/world/uk/uk-inflation-rate-slows-23-april-2024-05-22/
https://www.reuters.com/business/retail-consumer/uk-retail-sales-fell-12-june-ons-says-2024-07-19/
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Currency Markets Impact – Past Releases (Week 15 – 19.07.2024)
Server Time / Timezone EEST (UTC+03:00)
Currency Markets Impact:
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FOREX MARKETS MONITOR
Dollar Index (US_DX)
On the 17th the dollar experienced serious weakening. The dollar index dropped heavily. After finding support, the index moved sideways until the next day when it reversed to the upside. An upward and rapid movement took place until it found resistance on the 19th. There was an absence of significant figure releases related to the U.S. last week.
EURUSD
The EURUSD experienced an inverse than the U.S. index path since the USD was driving the market. On the 17th the USD depreciation caused the pair to jump until it found resistance at near 1.09460. It retraced to the 30-period MA and on the 18th the pair started to fall rapidly until the next day, on the 19th finding support at near 1.0875 before retracing to the MA again. The ECB decided to keep rates steady with the announcement taking place on the 18th but at the time of the release, the EUR was not affected greatly. The U.S. unemployment claims increased heavily, released on the 18th as well but the USD appreciated instead.
USDJPY
The USDJPY experienced a strong and sharp drop on the 17th as the dollar started to weaken significantly against other currencies. No significant news at that date related to the USD or JPY. In addition, a potential intervention strengthening the JPY took place and the USDJPY dropped until the support near 170.74. On the next day, the 18th of July, some JPY strengthening took place again early during the Asian session but did not last long. The pair started to move upwards on an uptrend after it broke several resistance levels. After reaching resistance at near 157.90 it eventually remained on a sideways path.
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CRYPTO MARKETS MONITOR
BTCUSD
Since Friday, the 19th of July, Bitcoin moved to the upside rapidly reaching the resistance near 67,400 USD and remaining on a sideways path during the weekend near the mean at 67K USD. On Sunday Bitcoin moved to the upside breaking out from that range and reaching near 68,500 USD before retracing to the 30-period MA.
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NEXT WEEK’S EVENTS (Week 22 – 26.07.2024)
Coming up:
Currency Markets Impact:
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COMMODITIES MARKETS MONITOR
U.S. Crude Oil
On the 17th Crude oil experienced a jump to the upside crossing the 30-period MA on its way up. After reaching the resistance at near 82.25 USD/b it retraced and reached the 61.8 Fibo level at near 81.30 USD/b. This rapid retracement forced the price to cross the MA on the 18th and reach the resistance area near 80.5 USD/b. It retraced back to the upside after that with another crossover but soon reversed again to the downside, settling near the 80.5 USD/b mean. As per our previous analysis forecast, Crude oil dived on Friday, a drop of nearly 2.6 USD/b. No retracement took place and that’s why today there is now potential for that, completing a mean reversion with a target level of 79.45 USD/b.
Gold (XAUUSD)
On the 12th the price continued with retracement after the previous day’s peak. When it touched the 30-period MA it reversed to the upside to continue with a sideways path. A triangle formation was apparent as we mentioned in our previous analysis and a breakout to the upside led to the price reaching the resistance near 2,440 USD/oz. It broke that resistance on the 16th of July and moved further upwards. A triangle formation was apparent recently as depicted on the chart. On the 18th that triangle was broken to the downside and Gold’s price dropped sharply. On the 19th that drop continued steadily until it reached the support near 2,394 USD/oz with no retracement taking place the same day. On the 22nd the market opened with a gap upwards, however it seems that there is room for more future upward movement.
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EQUITY MARKETS MONITOR
S&P500 (SPX500)
Price Movement
On the 17th of July, we finally saw a breakout to the downside reaching 5,620 USD as per our forecast in our previous analysis. It, however, continued with the downside until it reached the support near 5,590 USD before it retraced moving upwards back to the 30-period MA. On the 18th there was another breakout after the stock exchange opening that caused a sharp drop to the 5,530 USD before an intraday retracement took place. The level 5,540 was acting as a strong support coinciding with the 161.8 Fibo level. That eventually broke too on the 19th causing the index to reach 5,500 USD before retracing to the MA. The RSI is showing a slowdown and if the index crosses the 30-period MA on its way up it could spark a jump.
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