Welcome to the Topaz Global Weekly Market Outlook for July 22, 2024. As always, we provide an in-depth analysis of the financial markets, drawing on the latest data and trends to help you make informed trading decisions. In this edition, we’ll cover key financial indicators, economic events, and market trends, offering valuable insights to guide your investment strategies.
Summary of Key Points
- Expectations of a slowing labor market extend market belief of a September cut by the Fed.
- The latest data indicates a weakening EU economy.
- Mixed UK economic data leaves the MPC in a delicate situation.
- The yen remains vulnerable despite speculation of intervention and the pending BoJ’s decision.
- Gold prices decline after hitting a fresh all-time high.
- Oil prices are steady as investors weigh mixed signals.
- Mainstream investors drive Bitcoin prices amid distributions from long-term holders.
- Mega-caps fall and small-caps rise as weekly investments amount to the second highest ever.
Analyst’s View’s
Bullish
•US Dollar Index (DXY)
•Gold (XAUUSD)
•US Oil (WTI Crude Oil)
Bearish
•Euro (EURUSD)
•UK Pound (GBPUSD)
•Bitcoin (BTCUSD)
Neutral
•Nasdaq 100 (USTEC)
Instrument Outlooks
DXY (US Dollar Index)
The US Dollar Index (DXY) ended the week slightly higher as the market priced in more dovish peer central banks, but economic and political factors bolstered the greenback. The dollar rebounded from recent lows as US labor and manufacturing data contributed to uncertainty about the Fed’s rate-cut timing. Moreover, deteriorating US-China relations and increasing uncertainty over the US presidential race have attracted safe-haven demand.
Support Levels: 104.00, 103.40
Resistance Levels: 105.15, 104.28
XAUUSD (Gold – US Dollar)
Gold prices increased at the beginning of the week due to rising expectations of Fed rate cuts by September, coupled with softer inflation data and dovish signals from the central bank. However, mid-week, gold faced downward pressure as the US dollar and bond yields rebounded. Speculation that the Republican Party might win the upcoming US Presidential elections further impacted gold.
Support Levels: 2400, 2360
Resistance Levels: 2450, 2480
EURUSD (Euro – US Dollar)
The ECB held the interest rates as expected but hinted at a possible September cut. On Friday, ECB policymakers expressed greater confidence that inflation would reach the central bank’s target next year. The Euro initially rose but then faced resistance, remaining above key EMAs, indicating upward momentum.
Support Levels: 1.0800, 1.0725
Resistance Levels: 1.1064, 1.0960
GBPUSD (UK Pound – US Dollar)
Sterling weakened, retreating further from a one-year high reached earlier last week. UK retail sales fell more than expected in June due to cooler weather deterring shoppers. The pound is down for the week, and the BoE’s chance of an August rate cut is currently around 50-50.
Support Levels: 1.2845, 1.2800
Resistance Levels: 1.3040, 1.3140
AUDUSD (AU Dollar – US Dollar)
Australia’s labor market remains tight despite an unemployment rate above 4%. Hawkish RBA comments and a higher-than-expected CPI have raised rate hike expectations for August. However, the Australian dollar underperformed last week due to increased safe-haven demand stemming from deteriorating US-China relations.
Support Levels: 0.6645, 0.6570
Resistance Levels: 0.6795, 0.6710
USDJPY (US Dollar – JP Yen)
US economic activity indicators showed mixed conditions, allowing the Fed to remain steadfast in its stance. In Japan, a surplus trade balance and higher core inflation rate strengthened the yen. Alleged interventions further strengthened the currency. The market now focuses on the BoJ meeting to clarify policy rates.
Support Levels: 156.00, 154.00
Resistance Levels: 160.00, 158.00
GBPJPY (UK Pound – JP Yen)
The pound pared recent gains as June retail sales data disappointed, signaling a slowdown in consumption. Meanwhile, the yen strengthened due to Japan’s core CPI rise and suspected currency intervention.
Support Levels: 200.50, 197.20
Resistance Levels: 207.50, 211.80
US30 (Dow Jones Industrial Average)
US30 pared recent gains after rebounding above the ascending channel’s lower bound. The index remains above both EMAs, indicating further upside potential.
Support Levels: 40300, 39000
Resistance Levels: 42800, 41800
USTEC (Nasdaq 100)
USTEC failed to print a new record high after retesting the 20500 resistance. The index extended its plunge and approached the 19500 support.
Support Levels: 19500, 19000
Resistance Levels: 20500, 20000
HK50 (Hang Seng)
High youth unemployment and sluggish domestic demand in China continue to weigh on consumer sentiment amid the ongoing property crisis.
Support Levels: 17000, 16000
Resistance Levels: 18200, 17800
USOIL (WTI Crude Oil)
Oil prices rose to 82.00 but quickly dropped due to concerns about an economic slowdown in China. S&P Global predicts that oil prices could increase due to high demand during the summer peak season in the US.
Support Levels: 77.50, 75.30
Resistance Levels: 82.50, 80.00
BTCUSD (Bitcoin – US Dollar)
Bitcoin sustained a steady uptrend, breaching the 67000 threshold. EMA21 is rapidly narrowing the gap with EMA78, and the price remains above the descending channel’s upper bound.
Support Levels: 65430, 60300
Resistance Levels: 73740, 71500
Macroeconomic Highlights
North America
US retail sales, housing starts, and building permits were stronger than expected, showing resilient consumption. Fed Chair Powell noted increased confidence in disinflation, while other Fed officials mentioned that rate cuts are closer.
Europe (UK, EU, CH)
The latest data indicated that the Eurozone’s economy is weakening. UK June headline CPI was higher than expected, while services inflation remained high, challenging the market’s expectation of a rate cut next month.
Asia and Oceania (JP, CN, AU, NZ)
Japan’s core consumer prices rose, keeping the possibility of a rate hike on the table. China’s GDP growth unexpectedly slowed, prompting considerations for significant fiscal reforms.
Fundamental Information
Metals (Gold and other metals)
Gold prices declined after trading higher earlier in the week. This was driven by increased bets on interest rate cuts by the Fed, following soft inflation data.
Energies (Oil and other energies)
Namibia is emerging as a promising new oil destination, with significant discoveries by major companies. US crude oil inventories fell, marking the third consecutive week of decreases.
Indices
US indices posted a sharp decline due to fading AI hype and political turmoil. Chinese and Hong Kong stock markets diverged, with Mainland indices rising while the Hang Seng fell.
Cryptos (Bitcoin and other cryptos)
Mainstream investors drove Bitcoin prices with ETF inflows while long-term holders distributed their positions. The market continues to expect positive trends amid legal battles and significant events.
Economic Calendar
Monday, 22 July 2024
•CNY: China Loan Prime Rate 5Y
•EUR: German Retail Sales (MoM)
Tuesday, 23 July 2024
•JPY: Tertiary Industry Activity Index (MoM)
•EUR: ECB’s Lane Speaks
Wednesday, 24 July 2024
•EUR: HCOB Germany Manufacturing PMI
•USD: S&P Global US Manufacturing PMI
Thursday, 25 July 2024
•USD: Durable Goods Orders (MoM)
•USD: GDP (QoQ)
Friday, 26 July 2024
•USD: Core PCE Price Index (MoM)
•USD: Michigan Consumer Sentiment
This week’s market outlook highlights the ongoing challenges and opportunities across different financial instruments. From the potential rate cuts by the Fed and the ECB to the fluctuating fortunes of gold and oil, traders must stay informed and agile. As always, our analysis aims to provide you with the insights needed to navigate these dynamic markets.
Stay tuned for next week’s insights and happy trading!
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