Weekly Market Analysis | 17th June 2024

This week promises significant market activity with several crucial economic events and data releases. Traders, brace yourselves for heightened volatility and ample trading opportunities!

The week kicks off with the Empire State Manufacturing Index. The previous figure at -15.6 and a forecast of -12.5, this data point is crucial for assessing the health of the manufacturing sector in New York. Expect potential USD volatility based on how the actual data compares to expectations.

Tuesday the 18th June is a big day for the AUD, starting with the Cash Rate and RBA Rate Statement. The RBA is forecasted to keep the rates unchanged at 4.35%. Markets have priced in a no-change scenario and indicate the next quarter-point cut won’t come until early 2025. The Reserve Bank of Australia's communication will be the key for the AUD pairs after in the last meeting the central bank suggested the rates would stay higher for longer. The central bank has even discussed rate hikes in recent meetings.

Later in the day, the US releases Core Retail Sales m/m and Retail Sales m/m. Core Retail Sales are expected to hold steady at 0.2%, while Retail Sales are forecasted to rise to 0.3% from 0.0%. These figures will give us insight into consumer spending and as they play a role in how inflation expectations develop could significantly impact USD.

On Wednesday, 19th June, the focus shifts to the UK with the CPI y/y data release. It is forecasted to decrease to 2.0% from 2.3% and this is one of the key indicators the BoE will focus on as it forms its monetary policy. A higher-than-expected reading could support GBP as markets might have to adjust their expectations for the Bank of England’s next moves.

Thursday the 20th starts early with New Zealand's GDP q/q with expectations that it will rise to 0.1% from -0.1%. The Swiss National Bank then takes centre stage with its Monetary Policy Assessment and Policy Rate, followed by a Press Conference. Any surprises here could lead to significant volatility in the CHF.

In the UK, the Bank of England releases its Monetary Policy Summary, MPC Official Bank Rate Votes, and Official Bank Rate later in the day. The rate is expected to remain at 5.25% ahead of the general elections. The Bank of England is widely anticipated to maintain the Bank Rate at 5.25%. What will be crucial to watch will be the guidance, which could influence market expectations that currently suggest a 25 bps cut at the 1st August meeting. Later in the afternoon, the US Unemployment Claims data is due, with forecasts at 235K, slightly down from the previous 242K. This will provide fresh insights into the US labour market.

Friday wraps up the week with a flurry of PMI data from Europe, the UK and the US as well as the Retail Sales m/m from the UK, which is expected to bounce back to 1.6% from -2.3%, providing a snapshot of consumer spending. The PMI data from Europe is likely to be overshadowed by the UK general elections and the snap elections in France. The EUR has been under pressure since Macron’s unexpected election call, while strong US jobs data has boosted the USD, driving EURUSD lower.

AUDUSD

AUDUSDis trading inside a range with the lower boundary at 0.6578 while the range top is at 0.6714. While the market stays within the trading range, traders tend to buy near to support and sell near to the resistance level that creates the lower and upper boundaries of the range. However, eventually, the market will break out of the range we need to have an idea on how far the price move might take AUDUSD after the breakout. Lower and higher measured move targets at 0.6444 and 0.6856 respectively could come into play in the event of the market breaking decisively out of the range.

EURGBP

EURGBPis trending lower with both SMAs pointing down and the market trading near the SMA(20). If the market continues to rally against the trend the channel top together with the SMA(50) looks like a potential target for profit-taking among short-term traders while some might look at the same area as a potential re-entry level on the short side. The 38.2% Fibonacci retracement level at 0.8492 adds to the significance of this technical confluence area (0.8486 – 0.8492). However, the market could also face supply near the current levels. The 23.6% resistance level that roughly coincides with the SMA(20) might attract sellers. Alternatively, if EURGBP can rally decisively beyond the SMA(50), look for a move to 0.8230 and then perhaps to 0.8250.

S&P 500

The S&P 500 is trending higher in the daily chart but has lost some momentum lately. In the previous report, we identified potential signs for a minor correction in the market but the bulls stepped in and pushed the market higher. Now the same level (5375) that was a resistance at the time is a support level. If the level doesn’t hold the 23.6% retracement level and the SMA(20) forms a technical confluence level at around the 5326 low. Alternatively, if the market continues to trend higher without a retracement, the upper end of the price channel (currently at 5467) could be targeted by short-term traders.

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.

All times are GMT +3

Monday 17th June

Tuesday 18th June

Wednesday 19th June

Thursday 20th June

Friday 21st June

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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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