Weekly Market Analysis | 9th July 2024

With several significant economic events and data releases expected to boost market volatility this could be an interesting week for both intraday and swing traders! All the information is available on our economic calendar.

On Tuesday, the focus will be on the US with Fed Chair Powell's testimony. Traders will scrutinise his comments for insights into the Federal Reserve's economic outlook and future monetary policy. Any hints of rate changes or economic projections could significantly impact USD pairs, commodities and stocks.

The spotlight shifts to New Zealand early on Wednesday with the Official Cash Rate announcement. The rate is expected to remain at 5.50%, but the RBNZ Rate Statement is what traders will focus on, looking for clues on the future monetary policy. Later in the day, Fed Chair Powell's second testimony will again be crucial, potentially influencing market sentiment and USD valuation.

Thursday begins with the UK's GDP month-over-month data, forecasted to show a 0.2% growth, up from the previous 0.0%. Sizeable deviations from the expected number could impact sterling substantially. The US will release Core CPI month-over-month data, expected at 0.2%, alongside CPI month-over-month (0.1%) and year-over-year (3.1%) figures. These inflation metrics will be closely watched as the markets try to figure out if the Fed is likely to cut the rates once or twice this year. The current Fed Funds Futures pricing suggests there will be two 25 bp rate cuts by the end of the year. Unemployment Claims data will follow, with a forecast of 236K, slightly lower than the previous 238K.

Friday's key releases include the US Core PPI month-over-month data, expected to rise by 0.1%, and PPI month-over-month, also forecasted at 0.1%. These figures could influence inflation expectations and future Fed actions. Finally, the Preliminary University of Michigan Consumer Sentiment is expected, which could affect market sentiment and the USD.

Here are 3 markets to watch this week

USDJPY

USDJPY lost some momentum last week and retraced almost touching the 23.6% Fibonacci level. The level is closely aligned with a weekly level (160.19) that stopped the market rallying higher on April 29th. Now this level has acted as a support attracting buyers at 160.26. The market remains bullish above this level and could rally to 161.68 and then perhaps to new highs. Alternatively, should the market close below 160.19 look for a move down to the 38.2% Fibonacci retracement level (159.11).

NZDUSD

NZDUSD has been rallying on recent dollar weakness but the market is now at a resistance level (0.6147) and the market is also trading inside a bearish wedge formation. Therefore, we might see a move down to the 23.6% retracement level and if the market breaks out of the bearish wedge look for a move down to the 50% level (0.6100). The 50 period SMA and a recently created minor support level are somewhat closely aligned with the 0.6100 suggesting the area (0.6096 – 0.6100) is an important support area. Alternatively, if the market remains inside the bullish trend channel we might see a move to 0.6180.

Nasdaq

Nasdaq has continued to rally strongly with traders buying the dips pushing the market past the prior highs. The nearest support areas are relatively close at: 20,026 – 20,086 and 20,460 – 20,200. These areas are worth monitoring should there be a retracement back to these levels. The moving averages are pointing higher and the price is well above both averages indicating strength. The overall technical picture is therefore bullish. However, it’s always wise to prepare for the opposite scenario also. If the market starts to break supports a deeper corrective move could be ahead. Therefore it is vital to monitor price action near the key levels to see if the buy to dip mentality still prevails.

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)

Tuesday July 9th

Wednesday July 10th

Thursday July 11th

Friday July 12th

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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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