Important calendar events
The dollar remained steady last week, with the index hovering around the 104.3 level, ahead of the Fed monetary policy meeting this week. US treasury yields declined, with the US 10-year bond yield dropping to 4.20%.
One of the key factors that are driving the dollar right now is the US rate outlook. The US Federal Reserve kept interest rates unchanged at its policy meeting in June, within a target range of 5.25% to 5.50%, as expected. The US Federal Reserve has held interest rates steady since last July.
Markets this week will focus mainly on the Fed policy meeting on Wednesday. The Fed is expected to keep interest rates steady this week but will likely signal a rate cut in September. Markets are already pricing in a rate cut in September with almost 90% probability.
Traders will scrutinize Fed Chair Jerome Powell’s press conference after the meeting. If Powell’s speech is more hawkish than expected, rate cut expectations might drop, boosting the dollar.
On the data front, the Core PCE Price Index on Friday showed that US inflation did not change significantly in June. Core PCE Price Index, the Federal Reserve's primary inflation gauge, remained unchanged at 2.6% year-on-year in June, missing estimates of 2.5%.
Advance GDP data on Thursday showed that the US economy expanded by 2.8% in Q2 of 2024, surpassing expectations of 2.0% growth. US economic growth in Q1, however, was revised downward, showing that the economy expanded by just 1.4% in the first quarter of the year.
Advance GDP Price Index dropped to 2.3% in Q2 from 3.1% in Q1 against expectations of a 2.6% print. This is a strong inflation gauge, called the GDP deflator, and a drop in this index shows that price pressures in the US are easing, which may induce the Fed to start cutting interest rates soon.
Economic activity data released on Wednesday for the US were overall mixed and failed to provide support for the dollar. Flash Manufacturing PMI data were disappointing, showing that the US manufacturing sector has entered contractionary territory. The Flash Manufacturing PMI index dropped to 49.5 in July from 51.6 in June, falling short of expectations of a 51.7 print. A reading below the threshold of 50 denotes industry contraction. The US Services sector, on the other hand, continues to expand. The Flash Services PMI index dropped to 56.0 in July from 55.3 in June, beating expectations of a 54.7 print. The US Services sector continues to expand at an increased pace. New Home Sales in were disappointing though, dropping to 617K year-on-year in June from 621K in May, against expectations of 639K.
US inflation has dropped to its lowest level in three years, raising the odds of a rate cut in September. Headline inflation cooled to 3.0% year-on-year in June from 3.3% in May against expectations of 3.1%. Monthly inflation shrank by 0.1% in June against the 0.1% growth expected. Core inflation, which excludes food and energy, rose by just 0.1% in June from 0.2% in May dropping below expectations of 0.1% growth. Signs that inflationary pressures are easing might induce the Fed to start cutting interest rates in September.
EUR/USD dipped to the 1.085 level last week. If the EUR/USD pair declines, it may find support at 1.080, while resistance may be encountered near 1.095.
The ECB kept interest rates steady at its monetary policy meeting in July, after lowering its Main Refinancing Rate by 25 basis points to 4.25% in June. ECB President Christine Lagarde has stated that the central bank’s policy will remain data-driven. Markets expect that the ECB will cut interest rates again in September. The central bank’s policy outlook, however, will likely depend on the progress of disinflation in the EU over the coming months. Eurozone inflation remains sticky and may slow down the pace of future rate cuts.
Eurozone fundamentals released last week were pessimistic, putting pressure on the Euro. German and Belgian Business Climate data released on Thursday fell short of expectations. The German Business climate index is especially important, as Germany is the Eurozone’s leading economy, and a declining business climate is a sign of poor economic health.
German PMIs missed forecasts on Wednesday, indicating that the EU’s leading economy is weakening. Germany’s manufacturing sector fell deeper into contractionary territory in July, with a print of 42.6, far below the threshold of 50 that indicates industry contraction and below June’s reading of 53.6. Germany’s weakening manufacturing activity was reflected in overall Manufacturing PMI data for the Eurozone, which fell to 45.6 in July from 45.8 in June missing expectations of 46.0. The EU Services sector fared somewhat better. The EU Services PMI index dropped to 51.9 in July from 52.8 in June against expectations of 52.9. The Composite Flash Eurozone PMI Index dipped to 50.1 in July, down from 50.9 in June, marking its lowest level in five months and driven primarily by the steep decline in the manufacturing sector.
Eurozone inflation eased to 2.5% in June from 2.6% in May putting pressure on the Euro. Core CPI, which excludes food and energy, however, rose by 2.9% on an annual basis in June against expectations of a 2.8% print.
The Eurozone economy expanded by 0.3% in the first quarter of the year, which was in line with preliminary estimates. GDP data for Q4 of 2023 showed that the Euro area economy was stagnant with a GDP print of zero. The EU economy contracted by 0.1% in the third quarter of 2023 and barely expanded in the second quarter by 0.1%, after contracting by 0.1% in Q1.
GBP/USD edged lower last week, dropping to the 1.285 level. If the GBP/USD rate goes up, it may encounter resistance near 1.304, while support may be found near 1.277.
The BOE kept interest rates steady at its latest monetary policy meeting in June. The BOE maintained its official rate at a 16-year high of 5.25. The BOE is meeting this week on August 1st, and the odds of a rate cut in July are up to approximately 50%, while a rate cut by September is fully priced in. BOE rate cut odds within the year are on the rise and many analysts are predicting two rate cuts in 2024.
On the data front, British business activity has increased according to data released on Wednesday, bolstered by the fastest manufacturing growth in two years. The British Flash Manufacturing PMI Index rose to 51.8 in July from 50.9 in June, against a 51.1 reading. A print above 50 denotes industry expansion and July’s data showed that the manufacturing sector is growing at an advanced pace. The British Services sector also expanded in July, with a PMI print of 52.4 versus 52.1 in June.
The British economy is showing signs of improvement, reducing the odds of a dovish pivot by the BOE. GDP data showed that the British economy expanded by 0.4% in May following stagnation the month before and against expectations of 0.2% growth. Moreover, the British economy expanded by 0.7% in the first quarter of the year against initial estimates of 0.6% growth. The UK slipped into recession last year as the economy contracted by 0.3% in the final quarter of 2023.
Price pressures in the UK are easing, raising the odds of a BOE rate cut by September. British headline inflation remained steady at 2.0% year-on-year in June, beating slightly expectations of a drop to 1.9%. Annual Core CPI, which excludes food and energy, also remained steady at 3.5% in June. British inflation has consistently been down to the BOE’s target 2% target since May, indicating that the BOE’s hawkish monetary policy has been paying off.
USD/JPY dipped last week, ending the week below the 154.0 level. If the USD/JPY pair declines, it may find support near 151.7. If the pair climbs, it may find resistance near 162.0.
The Yen has been under pressure since the BOJ disappointed expectations of a hawkish shift at its latest meeting. The BOJ pivoted to a more hawkish policy at its meeting in March, ending its negative interest rate policy and raising the benchmark interest rate into the 0% - 0.1% range. The Yen continues to weaken as there is still a significant disparity between interest rates offered by the BOJ and those from other major central banks.
BOJ Governor Kazuo Ueda has hinted that the central bank will ease its bond purchasing at the next policy meeting on Wednesday. While rate cut expectations in July remain close to 30%, markets anticipate that the BOJ will ease its bond purchasing program this week, gradually shifting to a more hawkish policy.
Japanese official Toshimitsu Motegi stated late on Monday that the BOJ should start normalizing its monetary policy, through interest rate hikes. Motegi’s comments raised expectations of a rate hike at the BOJ policy meeting next week, boosting the Yen.
The Yen surged earlier this month, raising intervention speculation. The USD/JPY had been trading close to a 38-year high when the Yen received a sudden boost, fueling reports that the Japanese government has once again intervened to support the currency. So far Japanese officials have not commented on those rumors, but many analysts believe that the sudden reprieve in the Yen’s downfall was engineered by the BOJ. Analysts estimate that the BOJ has spent approximately $38.4 billion this month to prop up the Yen.
BOJ officials had been attempting to boost the Yen, warning traders against speculative short selling of the currency. The BOJ intervened to support the Yen in 2022 and again this year in late April and early May, when USD/JPY surged above the 160.0 level. The recent sudden boost in the Yen was likely due to another round of Yen buying by the Japanese government and has served to drive the message home that the government will step in to support the currency when necessary. Fears of another intervention have been preventing speculative short-selling of the Yen in the past few days, and the currency has been moving in an uptrend.
On the data front, inflation in Japan remains weak but rising. Headline inflation rose to 2.5% year-on-year in May from 2.2% in April. BOJ Core CPI rose to 2.1% on an annual basis in May from 1.8% in April, exceeding expectations of 1.9%. Rising inflation in Japan increases the odds of another BOJ rate hike later in the year. Tokyo Core CPI rose to 2.1% year-on-year in June from 1.9% in May against estimates of a 2.0% reading.
Preliminary GDP data for Q1 of 2024 for Japan showed that the country has slipped into recession. Japan’s economy shrank by 0.5% in the first quarter of the year against expectations of a 0.3% drop. Japan’s economy registered a small expansion by 0.1% in the final quarter of 2023, showing that the country’s economy is shrinking. Recession concerns limit the odds of a BOJ hawkish pivot in the coming months.
Gold prices were volatile last week, dipping to $2,370 per ounce on Thursday, then rallying to$2,390 per ounce on Friday. If gold prices rise, resistance may be encountered near $2,483 per ounce, while if gold prices decline, support may be encountered near $2,350 per ounce.
Gold prices have been typically directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar remained steady last week, with the index hovering around the 104.3 level, ahead of the Fed monetary policy meeting this week. US treasury yields declined, with the US 10-year bond yield dropping to 4.20%.
Gold prices are affected by central banks’ interest rates. A restrictive monetary policy hinders economic growth lowering the global economic outlook and putting pressure on gold prices. The US Federal Reserve kept interest rates unchanged at its policy meeting in June, within a target range of 5.25% to 5.50%, as expected.
This week we expect increased volatility in gold prices as three major central banks are holding their monetary policy meetings. The Bank of Japan and the US Federal Reserve will announce their interest rate decisions on Wednesday, and the Bank of England on Thursday.
The Fed is expected to keep interest rates steady this week but will likely signal a rate cut in September. Fed rate cut expectations in September are currently above 90%, boosting gold prices.
Gold prices have experienced a meteoric rise in the past few months and are trading in overbought territory. Geopolitical tensions raise the appeal of safe-haven assets boosting gold prices. Concerns that the crisis in the Gaza area may spread to neighboring countries are raising demand for safe-haven assets keeping gold prices high. Hopes of a ceasefire deal in Gaza, however, are putting pressure on gold prices.
Oil prices were volatile last week, with WTI price dropping below $77.0 per barrel early on Thursday, then rising above $79.0 per barrel later in the day and finally dropping back to $77.1 per barrel on Friday. If oil prices retreat, they may encounter support near $76.5 per barrel, while resistance may be found near $83.8 per barrel.
Oil prices were volatile last week, as markets weighed supply concerns against poor demand outlook. US crude oil inventories released on Wednesday showed a surprisingly large draw in US crude stockpiles, raising supply concerns and boosting oil prices. The US Energy Information Administration reported that weekly crude stocks fell by 3.7M barrels for the week to July 19th, against expectations of a smaller drop by 2.6M barrels and following another sharp drop by 4.9M barrels the week before.
Concerns about decreasing oil demand in China, the world’s largest importer, are putting pressure on oil prices. The oil demand outlook in China has been decreasing after the release of disappointing Chinese economic data. China’s GDP for the second quarter of the year has fallen below expectations. China’s GDP rose by only 4.7% in Q2 of 2024, after rising by 5.3% year-on-year in the first quarter.
Oil prices are kept in check by high central banks’ interest rates. The US Federal Reserve kept interest rates unchanged at its policy meeting in June, within a target range of 5.25% to 5.50%, as expected. The US Fed is keeping interest rates at a 23-year high, restricting economic growth and limiting the oil demand outlook as a result.
This week we expect increased volatility in oil prices as three major central banks are holding their monetary policy meetings. The Bank of Japan and the US Federal Reserve will announce their interest rate decisions on Wednesday, and the Bank of England on Thursday.
The Fed is expected to keep interest rates steady this week but will likely signal a rate cut in September. Increased rate cut expectations are propping up oil prices. Rate cut expectations in September are currently above 90%, boosting oil prices.
Oil prices are also supported by the seasonal oil demand outlook. Increased oil demand outlook in the summer months is propping up oil prices.
Supply concerns provide support for oil prices on global geopolitical risks. The ongoing crisis in the Middle East threatens to disrupt oil distribution. Tensions around the Red Sea area raise concerns that hostilities may spread further in the Middle East, affecting oil supply and distribution. Hopes of a ceasefire deal in Gaza, however, are putting pressure on oil prices.
OPEC+ has decided to extend most of its voluntary production cuts into 2025 to boost oil prices. OPEC, however, announced that it would gradually phase out oil production cuts and laid out plans for restoring production levels within 2025.
Bitcoin price was volatile last week, dropping from $68,000 to $63,000 mid-week, then paring losses and climbing back above $68,000 over the weekend. If BTC price declines, support can be found at $62,200, while resistance may be encountered at $70,000.
Ethereum price plummeted from $3,500 to $3,100 last week due to the disappointing performance of ETH spot ETFs but pared some of the week’s losses over the weekend, climbing back to $3,200. If Ethereum's price declines, it may encounter support near $3,000, while if it increases, resistance may be encountered near $3,560.
The US Securities and Exchange Commission (SEC) approved Ethereum spot exchange-traded funds (ETFs) last Monday. Spot Ethereum ETFs made their market debut on Tuesday, causing volatility in the price of Ethereum. Spot Ethereum ETFs generated over $1 billion in trading volume on Tuesday, propping up the cryptocurrency. The rally of Ethereum was short-lived, however, and a bearish trend prevailed on Wednesday as the hype around ETH spot ETFs faded. Ethereum crashed on Thursday, weighed down by the disappointing performance of Ethereum spot ETFs. After an impressive opening on the first day, the performance of ETH spot ETFs has been underwhelming since Wednesday, as inflows drop, and outflows rise.
Crypto markets were volatile after US President Joe Biden announced on Sunday his decision to end his re-election campaign. Biden endorsed the candidacy of Vice President Kamala Harris for the Democrats. Republican former President Donald Trump, however, remains ahead at polls for winning the US elections in November.
Fluctuating risk sentiment is causing volatility in crypto markets. Cryptocurrency prices are affected by central banks’ interest rates. High interest rates are restricting economic growth putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. The US Federal Reserve kept interest rates unchanged at its latest policy meeting, within a target range of 5.25% to 5.50%, as expected.
Rate cut expectations in September are currently above 90%, providing support for risk assets. The uncertainty around Fed rate expectations is likely to continue in the coming months causing volatility in crypto markets.
Crypto markets have been under pressure by the war in Gaza. Fears that the war will spread in the Middle East are promoting a risk aversion sentiment putting pressure on risk assets such as cryptocurrencies. Hopes of a ceasefire deal in Gaza, however, are propping up cryptocurrency prices.
BTC/USD 1h Chart
ETH/USD 1h Chart
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Written by:
Myrsini Giannouli
presencia en el sector como proveedor de liquidez
y una ejecución fiable
segregados
atención al cliente
Rellene el formulario
de registro y pulse en
"Crear cuenta".
Una vez esté en la zona segura de cliente, por favor proceda a cargar su prueba de identidad y prueba de dirección.
Cuando su cuenta real se apruebe, ¡puede depositar fondos y empezar a operar en la plataforma que quiera!
El sitio web que está viendo ahora es operado por TopFX Global Ltd, una entidad regulada por la Autoridad de Servicios Financieros (FSA) de Seychelles con una Licencia de Agente de Valores No SD037 que no está establecida en la Unión Europea o regulada por una Autoridad Nacional Competente de la UE.
Si desea continuar, confirme que su decisión será por su propia iniciativa exclusiva, y que TopFX, o cualquier otra entidad dentro del Grupo no han realizado ninguna solicitud.
No volver a mostrar este mensaje
La página web de TopFX usa cookies para optimizar la experiencia del usuario.
Estas cookies pertenecen a las siguientes categorías: esenciales, funcionales y publicitarias. Las cookies publicitarias también pueden incluir cookies de terceros.
Puede personalizar su selección de las cookies que desea aceptar.
Estas cookies son necesarias para que la página web funcione correctamente y no se pueden desactivar.
Las cookies funcionales permiten que la página web recuerde las preferencias de los usuarios y las elecciones que hagan en la página web, como el nombre de usuario, la región y el idioma.
Estas cookies se utilizan para rastrear a los visitantes en nuestros sitios web y mostrarle anuncios más relevantes. Las cookies de marketing también incluyen cookies de terceros de socios. Para obtener más información relacionada con la protección y recopilación de datos, consulte nuestra Política de privacidad y Divulgación de cookies.
