Market sentiment continued to fester this past week as traders backed away from their bets on the path of an interest rate hike by the Federal Reserve. The benchmark S&P 500 index closed in July with gains of more than 9%, its best monthly performance since late 2020. Strong performances from Apple and Amazon helped US stocks on Friday, rising 3.28% and 10.36%, respectively.
The US dollar weakened across the board as traders moved into Treasuries, lowering yields, especially along the short end of the US dollar-sensitive curve. However, high inflation and a possible stagnation point to stagflation in the economy, but this was not enough to discourage risk. The personal consumption expenditures (PCE) index rose 4.8% y/y, and US GDP growth declined 0.9% in the second quarter qoq. Gold prices benefited from a weak dollar, as traders pushed XAU to its highest level since July 6 against the dollar.
With that said, sentiment is likely to be at a fragile point, and traders will look to follow-up to confirm the uptrend seen in July. Meanwhile, weak economic indicators may continue to trigger the “bad news is good news” response in the markets. The US ISM manufacturing PMI for July is set to cross the wires at 52 this week, down from the previous reading of 53 in June. Earnings reports from several S&P 500 companies are set to decline during the week.
The Australian dollar may continue to rise this week but the interest rate decision from the Reserve Bank of Australia will be key to the direction of the Australian dollar. Many believe the RBA has rolled back the curve in terms of tackling inflation, which could lead the central bank to play a catch-up game. If so, it will probably help the AUD/USD rally higher. Analysts expect to see a 50bp rate hike from the Reserve Bank of Australia on Tuesday.
Elsewhere, New Zealand’s second-quarter employment report is due. The unemployment rate in the second quarter is expected to fall to 3.1%, according to a Bloomberg survey. The NZD/USD rose more than 0.5% last week. The British Pound is also poised for a possible movement on the back of the Bank of England interest rate decision. A 25 basis point rise is expected from the Bank of England. The GBP/USD pair posted a solid 1.5% gain last week. Canada’s July employment report and US non-farm payrolls report will conclude the week, with the non-farm payroll numbers being another event likely to have a significant impact and could see a shift in Fed rate hike bets.
The weekly performance of the US dollar against. coins and gold
Australian dollar forecast: US dollar volatility dominates the Australian dollar
The Australian dollar moved during the week, with CPI coming in higher but below expectations before the Federal Reserve and US GDP decimated the US dollar, lifting the AUD/USD pair.
British Pound Forecast (GBP/USD) – Will the BoE go strong this Thursday?
At the last BoE meeting, the central bank raised interest rates by 25 basis points, although three MPC members called for more. What is the size of the increase that the central bank will decide on Thursday?
Next week: Bitcoin, ETH Bull Run Resume After FOMC Meeting, BTC Reaches 6-week High
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Standard & Poor’s 500, FTSE 100 Week Coming: NFP, ISM and BoE Rate Decision
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USD/CAD Forecast: US and Canada employment reports in focus
New data out of the US and Canada may affect the near-term outlook for the USD/CAD amid the ongoing shift in monetary policy.
Gold price outlook turns bullish as July FOMC meeting signals peak Fed behavior
Gold prices could continue to recover in the near term as weak US economic data may stimulate the Federal Reserve’s monetary policy later this year, a scenario that could affect Treasury yields.
Euro Week: Non-farm payrolls under the microscope. Will the job market compensate for the slowing economy?
The euro rose slightly as the US dollar weakened. The US GDP contraction has once again increased focus on a pivot from the Federal Reserve. Are the markets wrong? All eyes are on non-farm payroll data.
US Dollar Technical Outlook: DXY, USD/JPY, GBP/USD Charts to Watch
The US dollar saw widespread weakness last week. The DXY, GBP/USD and USD/JPY are at key levels that could break or hold in the next week.
Standard & Poor’s 500, Nasdaq 100, Dow Jones forecast for next week
It was a big week for stocks as the Fed raised interest rates by another 75 basis points, helped by earnings reports from Apple and Amazon. Is the bear trend over?
Crude Oil Technical Outlook: WTI Crude Rebound in August
Crude oil is up more than 12% from its July lows with a bounce off technical support in focus in August. Important levels on the weekly chart of West Texas Intermediate crude.
Gold and Silver Price Forecast – XAU and XAG May Put Rally to Test
Gold and Silver saw a strong rebound, but strength may be tested as a new week begins; Levels and lines to watch.
Dollar and Yen Outlook: USD/JPY extends losses after strong bullish move
The USD/JPY continued its bearish move after the bulls ran out of momentum in mid-July. Is this a pullback or can the bears control the trend?