Welcome to the Topaz Global Weekly Market Outlook for August 5, 2024. This comprehensive analysis includes detailed reviews of major financial instruments, macroeconomic highlights, fundamental information, and a detailed economic calendar. Our goal is to provide valuable insights to help you navigate the complex world of forex trading.
Summary for the Weekly Market Outlook
House View
•Bullish: Gold (XAUUSD), Bitcoin (BTCUSD)
•Bearish: US Dollar Index (DXY), Euro (EURUSD), UK Pound (GBPUSD), US Oil (WTI Crude Oil)
•Neutral: Nasdaq 100 (USTEC)
Focus of the Week for the Weekly Market Outlook
The market outlook for the upcoming week is influenced by both technical and macroeconomic factors. While technical analysis provides expectations of price movements, macroeconomic analysis can vary based on changes in sentiment.
Key Points
1. Dollar faces headwinds: Weaker job data and heavy rate-cut expectations.
2. Eurozone CPI rise: Makes the September rate cut uncertain.
3. Pound weakens: First BoE rate cut since March 2020.
4. Yen outlook shifts: BoJ surprisingly hikes the rate.
5. Gold price trajectory: Fed rate cuts sentiment maintains gold prices’ upward trajectory.
6. Oil prices plunge: Due to slower US job data.
7. Bitcoin buybacks: Support prices amid sell-offs.
8. Tech earnings disappoint: Slowing economy weighs on the indices.
Instrument Outlooks for the Weekly Market Outlook
DXY (US Dollar Index)
•The US Dollar Index dropped below 103.70, its lowest level in over four months, as weak job data boosted dovish expectations for the Fed. The index’s EMA21 remains below EMA78, indicating a potential bearish extension. The widening distance between the EMAs could confirm the strengthening downward momentum, leaving more room to fall.
•Support Levels: 102.30, 100.60
•Resistance Levels: 105.20, 106.50
XAUUSD (Gold – US Dollar)
•Gold prices surged following weak US job data, approaching a record high. The ISM data showed a sharp contraction in the manufacturing sector, adding concerns that the Fed will not achieve a soft landing. XAUUSD briefly traded above the 2450 level but closed at around 2441. If XAUUSD surges above the record high, the price could test the first resistance at around 2485 before 2550.
•Support Levels: 2350, 2280
•Resistance Levels: 2485, 2550
EURUSD (Euro – US Dollar)
•The Eurozone’s preliminary CPI rose slightly due to energy prices, while services and food inflation eased. EURUSD declined throughout the week before rebounding significantly on Friday, testing the descending trendline and closing just below it. If EURUSD closes above the previous high of 1.0866, the price could confirm the uptrend, with the target at around the 1.1111 level.
•Support Levels: 1.0707
•Resistance Levels: 1.0866, 1.1111
GBPUSD (UK Pound – US Dollar)
•GBPUSD rebounded sharply after a false break below the ascending channel’s lower bound. The bounce formed another higher low, indicating an upward price structure. If GBPUSD surpasses the 1.2900 resistance, the price may test the previous high at around 1.3000.
•Support Levels: 1.2740, 1.2600
•Resistance Levels: 1.2900, 1.3000
AUDUSD (AU Dollar – US Dollar)
•AUDUSD extended its decline, holding below both EMAs, with a death-cross indicating further downside potential. The pair found relief from its recent decline as disappointing US nonfarm payroll data bolstered expectations for Fed rate cuts, weakening the US dollar. If AUDUSD breaks below the 0.6480 support, further weakness might occur towards the subsequent support at 0.6380.
•Support Levels: 0.6480, 0.6380
•Resistance Levels: 0.6580, 0.6650
USDJPY (US Dollar – JP Yen)
•USDJPY significantly declined to around its support at 146.50 after breaking its ascending channel. The yen surged after the BoJ raised interest rates to 0.25% and planned to cut bond purchases. If USDJPY extends its decline below the 146.50 level, the price may plunge to nearby support at 140.80.
•Support Levels: 146.50, 140.80
•Resistance Levels: 152.00, 153.70
GBPJPY (UK Pound – JP Yen)
•GBPJPY plummeted to 187.60, erasing all its gains since May. EMA21 death-crossed EMA78, sending out a typical bearish signal. If GBPJPY breaks the trendline and fails to stay above the support at 185.00, the price may retreat further to the 179.00 support.
•Support Levels: 185.00, 179.00
•Resistance Levels: 190.00, 193.50
US30 (Dow Jones Industrial Average)
•US30 failed to hold above EMA21 and dropped sharply to 39725. If US30 fails to stay above EMA78 and breaks the support at 39300, the price may fall further to the 38000 threshold.
•Support Levels: 39300, 38000
•Resistance Levels: 41500, 42500
USTEC (Nasdaq 100)
•USTEC retested both EMAs, coinciding with its descending trendline. The index was under pressure and bounced off to close below both EMAs and its support at 18750, indicating persistent bearish momentum. If USTEC extends its decline below 18250, the index may aim for the nearby support area around 17000-17350.
•Support Levels: 18250, 17350
•Resistance Levels: 18750, 19550
HK50 (Hang Seng)
•HK50 extended its decline within the descending channel, with the death-cross EMAs indicating further downside potential. If HK50 sustains its bearish momentum below the 17000 resistance, further weakness may occur towards the channel’s lower bound at 16000.
•Support Levels: 16000, 15200
•Resistance Levels: 17000, 17800
USOIL (WTI Crude Oil)
•USOIL retested the 77.50 resistance and EMA21 before breaching the 75.00 level. The price has formed lower swings, highlighting the downward momentum. If USOIL bounces from the 72.50 support, the price may retest the 75.00 resistance.
•Support Levels: 72.50, 70.00
•Resistance Levels: 75.00, 77.50
BTCUSD (Bitcoin – US Dollar)
•BTCUSD significantly plunged after failing to return above the 60000 resistance. The price plummeted below the descending channel, approaching the 50000 psychological support. If BTCUSD bounces from the 50000 support, the price may retrace to the 55000 resistance.
•Support Levels: 50000, 45000
•Resistance Levels: 55000, 60000
Macroeconomic Highlights for the Weekly Market Outlook
North America
•The July jobs report showed a labor market losing momentum, but a recession is unlikely. Nonfarm payrolls rose by 114K, pushing the unemployment rate to 4.3%. Average hourly earnings slightly missed estimates. The FOMC meeting earlier illustrated a shift from a sole inflation focus to a balance between employment. Post-FOMC, the market maintained expectations of one cut each meeting this year.
Europe and UK
•The Eurozone preliminary CPI edged up unexpectedly to 2.6% YoY. Core inflation remained unchanged for three consecutive months. The BoE cut interest rates for the first time since March 2020 to 5.00%. The Eurozone’s 2Q GDP was in line with expectations of 0.6% YoY. The latest US NFP had more effect than the potential cut of the BoE and the ECB, making the outlook complicated.
Asia and Oceania
•The BoJ’s surprise rate hike to 0.25% and plans to reduce bond purchases signal a more hawkish stance, leading to immediate yen appreciation. China’s manufacturing PMI contracted for the third consecutive month. The PBoC has signaled a shift in focus towards stimulating consumption and supporting people’s livelihoods. The effectiveness of these new policies in reviving consumer confidence will be crucial.
Fundamental Information
Metals
•Gold (XAUUSD): Market participants have accumulated more ‘long’ positions, indicating their optimism about gold prices. The latest US NFP has influenced gold prices significantly.
•Other Metals: Developments in the Middle East conflict have made market participants more optimistic about an orderly environment.
Energies
•Oil (WTI Crude Oil): US crude oil prices fell over 1% last week. The outlook for oil remains uncertain due to mixed factors. The strong economic growth in the US could support demand, but the significant reduction in Chinese imports suggests potential global demand weakness.
•Other Energies: US utilities added 22 billion cubic feet of gas into storage. The outlook for natural gas remains bearish due to concerns surrounding the potential impact of a trade dispute with China.
Indices
•US Indices: US indices continued their correction trajectory as disappointing earnings from Alphabet and Tesla weighed on bullish sentiment. The performance of corporate earnings and geopolitical developments will be critical in shaping future trends.
•Chinese Indices: Chinese indices dropped last week due to economic slowdown and geopolitical risks.
Cryptos
•Bitcoin (BTCUSD): Bitcoin surged after the SEC approved the Grayscale Mini Trust. US Senator Tim Scott emphasized that the Democratic Party stalled the passage of the cryptocurrency bill. A Republican Party landslide victory in the election could pave the way for a favorable environment for bitcoin.
•Other Cryptos: Investors remain optimistic about the potentially unfinished cycle, while on-chain activities align with this perception.
Economic Calendar
Monday, August 5, 2024
•JPY: au Jibun Bank Japan Services PMI
•CNY: Caixin Services PMI
•EUR: HCOB Spain Services PMI, HCOB Italy Services PMI, HCOB France Services PMI, HCOB Germany Services PMI, HCOB Eurozone Composite PMI, HCOB Eurozone Services PMI
•GBP: S&P Global/CIPS UK Composite PMI, S&P Global/CIPS UK Services PMI
•USD: S&P Global Composite PMI, S&P Global Services PMI, ISM Non-Manufacturing Employment, ISM Non-Manufacturing PMI, ISM Non-Manufacturing Prices
•GBP: BRC Retail Sales Monitor (YoY)
•JPY: Household Spending (YoY), Household Spending (MoM)
Tuesday, August 6, 2024
•AUD: Building Approvals (MoM)
•JPY: 10-Year JGB Auction
•AUD: RBA Interest Rate Decision, RBA Monetary Policy Statement, RBA Rate Statement
•EUR: German Factory Orders (MoM)
•GBP: S&P Global / CIPS UK Construction PMI
•USD: Exports, Imports, Trade Balance
•CAD: Trade Balance
•USD: Atlanta Fed GDPNow (Q3)
•USD: EIA Short-Term Energy Outlook
•USD: 3-Year Note Auction
•USD: API Weekly Crude Oil Stock
Wednesday, August 7, 2024
•CNY: Exports (YoY), Imports (YoY), Trade Balance (USD)
•GBP: Halifax House Price Index (MoM), Halifax House Price Index (YoY)
•EUR: German Industrial Production (MoM), German Trade Balance
•CAD: Ivey PMI
•USD: Crude Oil Inventories, Cushing Crude Oil Inventories, 10-Year Note Auction, Consumer Credit
Thursday, August 8, 2024
•AUD: NAB Business Confidence
•CNY: Exports (YoY), Imports (YoY), Trade Balance (USD)
•NZD: Inflation Expectations (QoQ)
•USD: Continuing Jobless Claims, Initial Jobless Claims
•CAD: Trade Balance
•USD: Atlanta Fed GDPNow (Q3)
•USD: 30-Year Bond Auction
Friday, August 9, 2024
•CNY: CPI (MoM), CPI (YoY), PPI (YoY)
•EUR: German CPI (YoY), German CPI (MoM)
•CHF: SECO Consumer Climate (Q3)
•CAD: Employment Change, Unemployment Rate
•USD: US Baker Hughes Oil Rig Count, US Baker Hughes Total Rig Count
•GBP: CFTC GBP speculative net positions
•USD: CFTC Crude Oil speculative net positions, CFTC Gold speculative net positions, CFTC Nasdaq 100 speculative net positions, CFTC S&P 500 speculative net positions
•AUD: CFTC AUD speculative net positions
•JPY: CFTC JPY speculative net positions
•EUR: CFTC EUR speculative net positions
Analysis of Market Trends
US Dollar (DXY)
•The US Dollar has shown resilience amidst a backdrop of mixed economic data. The potential for rate cuts by the Federal Reserve in September has added to the dollar’s volatility. Investors remain cautious, keeping a close watch on upcoming data releases and Fed communications.
Gold (XAUUSD)
•Gold has maintained its upward trajectory, driven by expectations of Fed rate cuts. The metal’s safe-haven appeal remains strong, particularly in light of geopolitical tensions and economic uncertainties. However, rising Treasury yields could pose a challenge to sustained price increases.
Euro (EURUSD)
•The Euro has been under pressure due to weak economic data from the Eurozone. The decline in PMIs highlights slower growth, raising concerns about the region’s economic outlook. The ECB’s cautious stance on rate cuts has added to the euro’s woes.
UK Pound (GBPUSD)
•Sterling has faced downward pressure amid disappointing economic data and uncertainties surrounding the Bank of England’s interest rate decisions. The upcoming MPC meeting will be crucial in determining the pound’s near-term direction.
Australian Dollar (AUDUSD)
•The Australian dollar has been relatively stable, with traders closely monitoring domestic economic data and geopolitical developments. The RBA’s monetary policy stance and global risk sentiment will be key drivers of AUDUSD movements.
Japanese Yen (USDJPY)
•The Japanese yen has strengthened due to rising domestic inflation and potential BoJ interventions. However, the currency remains vulnerable to global risk sentiment and monetary policy decisions by major central banks.
Bitcoin (BTCUSD)
•Bitcoin has experienced significant price fluctuations, influenced by regulatory developments and market sentiment. The approval of the Grayscale Mini Trust and favorable political statements have bolstered investor confidence. However, the cryptocurrency market remains highly speculative.
Crude Oil (WTI)
•Crude oil prices have been volatile, reflecting mixed signals from the global economy. Concerns about reduced demand in China and geopolitical tensions have impacted prices. The outlook for oil remains uncertain, with investors weighing the potential for supply disruptions against demand growth.
Stock Indices (US30, USTEC, HK50)
•Major stock indices have shown divergent trends, with US indices correcting due to disappointing earnings and Chinese indices declining on economic concerns. The performance of corporate earnings and geopolitical developments will be critical in shaping future trends.
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The financial markets remain dynamic and complex, influenced by a range of factors including economic data, central bank policies, and geopolitical developments. Our comprehensive analysis provides valuable insights to help you navigate these challenges and make informed trading decisions. Stay tuned for next week’s market outlook, and remember to leverage our advanced trading algorithms to enhance your investment strategies.
