Weekly market analysis 9th September 2024

This week is shaping up to be a significant one for traders, with a series of key economic events and data releases that could trigger market volatility. Intraday and swing traders should be on high alert to capitalise on the opportunities ahead. Today, there are no major economic releases, providing a moment to strategize for the busy week.

On Tuesday, all eyes will be on the UK with the release of the Claimant Count Change data. Forecasts suggest a significant drop to 95.5K from the previous 135K. A lower-than-expected figure could potentially strengthen the GBP as it might reflect a more robust labour market than anticipated. Also on Tuesday, the Bank of Canada Governor Macklem will be speaking. His comments could provide further clues on the direction of Canadian monetary policy, influencing the CAD.

Wednesday is set to be a busy day, starting with the UK's GDP month-over-month data. The forecast indicates a rise to 0.2% from 0.0%, which, if realised, could bolster the GBP. Later in the day, traders are focused on the main risk event of the week: the crucial US inflation data release, including Core CPI month-over-month, expected to remain steady at 0.2%, and CPI year-over-year, anticipated to drop to 2.6% from the previous 2.9%. These figures will be closely monitored as they may shape expectations for the Federal Reserve’s next moves on interest rates.

Thursday will focus on Europe, where the ECB is set to announce its Main Refinancing Rate, expected to decrease slightly to 3.65% from 4.25%. This decision, coupled with the ECB’s Monetary Policy Statement, could have a significant impact on the EUR, especially if the rate cut is deeper than expected. Later, the US will release Core PPI month-over-month, with a forecast of 0.2%, up from 0.0% and Unemployment Claims expected to rise slightly to 229K from 227K. These releases could provide further insights into the US economy's health and inflationary pressures.

The highlight of the US session on Thursday is the ECB Press Conference. This event is expected to provide more detailed explanations of the ECB’s decisions and could result in increased volatility for the euro. Traders should be prepared for potential market movements as the ECB’s stance on monetary policy becomes clearer.

Friday is relatively quiet in terms of major risk events, but the Preliminary University of Michigan Consumer Sentiment and Inflation Expectations reports could influence the markets. These inflation-related data points might offer insights into inflation trends, leading to further speculation on Federal Reserve policy. Currently, traders anticipate a 73% probability of a quarter-point rate cut at the September 18th FOMC meeting, with expectations of a further 0.5% cut this year, indicating potential USD weakness.

In conclusion, this week’s data releases, particularly from the UK, US, and Eurozone, will be pivotal in shaping market sentiment and guiding future monetary policy decisions.

Here are 3 markets to watch this week

EURUSD

In Friday's trading, EUR/USD formed a lower reactionary high, indicating a potentially bearish setup despite the moving averages still pointing upwards. This pattern suggests the market could break below the nearest support level at 1.1026. If there is a decisive break below this level, we might see EUR/USD decline further to 1.0950 and potentially down to 1.0897. Alternatively, if the price remains above 1.1026, a move towards 1.1090 could be expected.

GBPUSD

Last week, GBP/USD attempted to rally but ultimately closed on Friday near the levels it opened on Monday, indicating a loss of momentum. This, coupled with the bearish sentiment in EUR/USD and bullishness in the US Dollar Index, could lead to further weakness in GBP/USD. If the market breaks the 1.3087 support level, the bears may push the price down to the next support at 1.3044. Traders should closely monitor the market's reaction at this level, as it poses a risk for those building bearish positions. If the market quickly rebounds above 1.3087 and holds, we could see a move higher towards 1.3145. Conversely, if 1.3087 remains unbroken, it becomes the first resistance level that bulls need to overcome to drive the market higher. A third scenario could see continued weakness and selling below 1.3087, potentially driving the market down to 1.2910.

Dow Jones Industrial Average

Last week, the Dow traded lower, breaking the previous week's low and forming a wide-range bearish candle, signalling potential weakness that could drive the market down to around 39,700. This is particularly likely if the current recovery attempt is halted by the resistance area at 40,852 - 41,074.

Technically, the market remains bearish below this area, despite the long-term trend remaining bullish, with weekly moving averages still pointing higher.

This suggests that last week's decline could be a corrective move within the broader uptrend, potentially attracting institutional buying at lower levels. However, this remains speculative, and price action will need to confirm this hypothesis. Alternatively, the market could rally from current levels and potentially move towards 41,400, though this scenario is less likely from a technical perspective. With US inflation numbers due this week, intraday and swing traders should monitor the market closely and consider trading when the edge they have tried and tested is present.

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 10th September

Wednesday 11th September

Thursday 12th September

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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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