This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
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- The market sentiment deteriorated today amid increasing new virus cases in the USA and Australia. Investors prefer safe-haven assets like gold, the US dollar and the Japanese yen. Stocks and riskier currencies are loosening.
- The US PMI came yesterday better than expected. It turned out 57.1, while the forecast was 50.0. It marked the industry expansion and gave an additional stimulus to the US dollar.
- The reserve bank of Australia made a rate statement. Officials left everything unchanged. According to them, the worst is over, but the outlook is uncertain and the recovery will be bumpy. The Board will not increase the cash rate until Australia reaches full employment and the target rate of inflation. They have stopped asset purchases, but they will resume them, if needed.
- The German industrial production came worse than analysts anticipated and weighed on the Euro. It rose only by 7.8% while the forecast was 11.0%.
After the RBA statement, the Australian dollar reversed from the resistance at 0.6990 and slumped. It will meet the next support at 0.6935. If it breaks it down, it may fall deeper to the 50-day moving average at 0.6910. Resistance levels are at 0.6990 and 0.7015.
Let’s move on to gold. It caught the overall risk-off mood and gained on it. XAU/USD has just crossed the strong resistance at $1 780. It basically means it may reach soon $1 800 – the level that analysts widely expect. Support levels will be at $1 770 and $1 760.
EUR/USD has just bounced back from the strong resistance at 1.330, that it has touched already once. Thus, it has formed a double top pattern, which is an extremely bearish signal. It will meet soon the support at 1.1300. If it manages to cross it, it will open doors towards the next support at the low of July 2 at 1.1265.
Finally, let’s have a look what’s happening with the S&P 500. It has been trading in a range between 3 000 and 3 225 for over a month. However, this range is narrowing, and we could easily draw a triangle. The stock index may fall to the support at 3 110 today. If it breaks it down, it may fall even deeper to the 200-day moving average at 3 025 and continue its zig-zag movement.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
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The RBA and the Bank of Canada will add volatility to the AUD and the CAD, while USD is expected to be boosted by the Non-farm payrolls.