Weekly Market Analysis 15th July 2024

This week promises to be eventful for traders, with several significant economic events and data releases expected to heighten market volatility. Set alerts for these events and be ready for the trading opportunities ahead!

The week kicks off on Monday 15th July with the Empire State Manufacturing Index for the US, showing worse than expected data. Later, all eyes will be on Fed Chair Powell’s speech, which could provide insights into future monetary policy and economic outlook.

On Tuesday we get data from Canada and the US. In Canada, CPI data will be released, including the month-over-month figures, as well as the Median and Trimmed year-over-year CPIs. The previous Median CPI y/y was 2.8%, and the forecast is slightly lower at 2.7%. Trimmed CPI y/y was 2.9% previously, and the new forecast is 2.8%. These inflation measures are crucial for understanding underlying price trends and potential adjustments in monetary policy.

In the US, both Core Retail Sales and overall Retail Sales data will be published. Previously, Core Retail Sales m/m were at -0.1%, and the new forecast is 0.1%. Overall Retail Sales m/m were at 0.1%, with the forecast now at -0.2%. These metrics are vital for assessing consumer spending trends and can significantly impact market sentiment.

Key inflation data will be released from New Zealand and the UK on Wednesday. New Zealand will report its quarterly CPI, with the previous figure at 0.6% and the new forecast at 0.5%, indicating a potential slowdown in inflationary pressures. The UK will release its year-over-year CPI data. Previously at 2.0%, the new forecast is 1.9%. As a critical indicator for the Bank of England's policy decisions, any deviations from the forecast can significantly impact the GBP.

Thursday will be a busy day with significant data from multiple regions. In Australia, Employment Change and Unemployment Rate figures will be announced. Employment Change was previously 39.7K, with a lower forecast of 20.2K. The Unemployment Rate was at 4.0%, with the forecast remaining steady at 4.1%. Stronger-than-expected employment data could bolster the AUD.

The UK will report its Claimant Count Change, previously at 50.4K with a new forecast of 23.4K, indicating potential improvements in the labour market. The highlight of the day will be the European Central Bank will announce its Main Refinancing Rate, expected to remain steady at 4.25%. This will be followed by a press conference, crucial for understanding the ECB's monetary policy stance. In the US, weekly Unemployment Claims will be released, with the previous figure at 222K and a slightly higher forecast of 229K, providing a snapshot of the labour market’s health.

On Friday focus will be on retail sales data from the UK and Canada. The UK will release its month-over-month Retail Sales data, which was previously at 2.9%, with a forecast of -0.6%, indicating a potential slowdown in consumer spending. Canada will publish both its Core Retail Sales and overall Retail Sales figures. Core Retail Sales m/m were previously at 1.8%, with a new forecast of 0.3%. Overall Retail Sales m/m were at 0.7%, with the forecast now at -0.2%, reflecting a potential decrease in consumer activity.

Here are 3 markets to watch this week

EURUSD

EURUSD is currently trading close to a key resistance level at 1.0916. The US dollar rallied earlier today following the Trump assassination attempt over the weekend, but the rally was short-lived, and the dollar has since weakened in the European session.

Due to the closeness to the 1.0916 resistance level there is an increased risk of EURUSD correcting lower and trading down to the 1.0860 level. Should a retracement occur, the price action around this support level will be crucial as it coincides with the 50% Fibonacci retracement level, the 20-period SMA, and the lower boundary of the bullish trend channel.

Above this confluence level, the market may test levels beyond a key resistance at 1.0916. Alternatively, if the dollar strengthens and EURUSD is pushed down to 1.0860, breaking this level could lead to a further decline towards 1.0760.

AUDUSD

The AUDUSD pair is currently trading within a bullish trend channel. The moving averages are still pointing upwards, with the market trading above the 20-period Simple Moving Average (SMA), indicating continued upward momentum. However, there is a slight loss of momentum as observed by the lower reactionary high at 0.6793. Should the uptrend persist, a rally beyond the last week's high of 0.6798 could push the pair towards the nearest key weekly resistance level at 0.6871.

Conversely, if the market breaks below the 23.6% Fibonacci retracement level at 0.6756, it may lead to a decline, with the AUDUSD pair potentially trading down to 0.6715, and possibly further to 0.6680.

S&P 500

The S&P 500 index has formed a double top pattern on the 8-hour timeframe but remains in an uptrend with moving averages pointing upwards. The fast 20-period SMA is above the slow 50-period SMA, indicating ongoing bullish momentum.

The latest reactionary low at 5570 aligns closely with the 23.6% Fibonacci retracement level. The market maintains its bullish stance above the 5524 level, which coincides with the 38.2% Fibonacci retracement level and the 50-period SMA, while staying within the bullish trend channel.

Therefore, the uptrend remains intact as long as the price remains above these levels. Conversely, if the market breaks decisively below 5524, it could lead to a decline, potentially targeting the 5460 level. Monitoring price action around these key support levels will be essential for predicting future price movements in the S&P 500.

This weeks high impact market events

The following economic events and data releases have the potential to cause considerable price movements, thereby offering you both opportunities and risks. Stay informed and leverage our economic calendar to access real-time data and analysis as these key events unfold.

Time (GMT +3)

Monday 15th July

Tuesday 16th July

Wednesday 17th July

Thursday 18th July

Friday 19th July

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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