The Fed is ready to start tapering in November. Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
Main market movements on July 30
The market sentiment switched to risk-off after the Fed’s Powell statement. The USD edged higher, while risker assets started falling after reaching quite high levels. Let’s have a closer look.
- The Federal Reserve left interest rates unchanged and pointed to the most severe economic downturn “in our lifetime.” Indeed, the outlook is quite uncertain as new infections are still rising. Therefore, the recovery mostly depends on the government’s control over the virus spread. In response, he claimed that officials will take all efforts to support the economy. After the report, the USD dropped, the EUR and the GBP surged. However, now we can observe the totally opposite situation as market flows have reversed.
- Democrats and Republicans will have an agreement over new stimulus package soon. Most expect that they may make a deal on Friday. The federal addition of stimulus payments to individuals by 600 dollars per week is the main sticking point.
- Japanese retail sales rose twice more than forecasted. They came out 1.2%.
- US pending home sales exceeded expectations by 1%. They were 16.6%.
- Good news for the oil market. Crude oil inventories contracted by 10.6 million barrels during the last week, while analysts anticipated the 1-million-barrels increase. The WTI oil price changed modestly.
The most traded pair almost reached the 61.8% Fibonacci level at 1.8200, but then reversed. Now it’s moving down towards the support at 1.1745. If the price breaks it down, it may fall even deeper to the low of July 28 at 1.1715.
XAU/USD is approaching the support level at $1 950. If gold crosses it, it may tumble to the next one at $1 930, which it has touched several times already. Otherwise, the move above the recent high at $1 970 will drive the price to the all-time high.
The stock index has started falling today. There is the support line ahead at 3 210. If it breaks this level down, it will open doors towards the next support at 3 190, which it has touched few times. Resistance levels are at the high of July 22 at 3 270 and at 3 325.
The pair has frozen near the 105.00 level for several days. Now it’s really close to escape it. If it breaks it through, it will clear the way upwards to 105.58 and then to 106.15. Support levels are at the yesterday low at 104.89 and at the low of March 11 at 104.42.
- The German preliminary GDP will be released at 11:00 MT time. It will have a huge impact on the euro.
- The US advance GDP will be published at 15:30 MT time. Stay tuned!
US Retail Sales will be out on October 15 at 15:30 MetaTrader time (GMT+3).
The crypto market keeps recovering. Bitcoin has broken above $57,000. The way up to $60,000 is open now!
The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).
Great Britain will publish the Inflation Rate on October 20, at 09:00 MT time (GMT+3).
The bullish movement in the stock market is gaining speed, and Bitcoin ETFs are closer than they might seem. What do we need to know for the next trading week?