09 Jul

EUR/USD Holds Firm Amid Weakening Dollar and Rate Cut Expectations

By RoboForex Analytical Department

The EUR/USD pair is maintaining its position close to a multi-week high of 1.0829, benefitting from the weakening US dollar following a disappointing June US employment market report. Market anticipation is now building ahead of an upcoming speech by Federal Reserve Chair Jerome Powell.

Despite the looming potential for political deadlock in France, the euro has remained resilient. Investors are finding reassurance in the belief that the current political situation may act as a deterrent to any drastic fiscal measures from far-right or far-left parties, thereby stabilising the financial landscape.

With a relatively quiet macroeconomic calendar, attention is squarely on the US interest rate trajectory. According to CME FedWatch, the likelihood of a rate cut at the Fed’s September meeting has increased to 76%, up from 66% the previous week. Expectations are also growing for a second rate cut in December.

Jerome Powell’s testimony before Congress, starting Tuesday, will be pivotal for currency markets, as insights into the Fed’s policy outlook could influence exchange rates significantly.

Technical analysis of EUR/USD

The EUR/USD is navigating through a consolidation range just above the 1.0806 level. There is a strong potential for an upward move towards 1.0900, which is currently being considered. If this level is reached, a retest to 1.0844 may follow before another potential rise to 1.0944. This bullish setup is further supported by the MACD indicator, where the signal line remains above zero and points upwards, indicating a continued upward momentum.

On the H1 chart, the market is poised for further advancement after completing a growth pattern to 1.0840 and a subsequent correction to 1.0820. A move towards 1.0844 is expected. If this level is breached, it could pave the way to 1.0900. The Stochastic oscillator reinforces this outlook, with the signal line currently above 50 and trending upwards, suggesting a strengthening bullish momentum.

Investors will be keenly watching for Powell’s comments and any further economic indicators this week, as they could play a crucial role in shaping short-term market dynamics and currency valuations.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
08 Jul

FRA40: Steady as France faces hung parliament

By ForexTime 

  • France’s Left-Wing coalition bags surprise victory
  • No outright majority means hung parliament outcome
  • FRA40 bounces from 200-day SMA
  • Key levels of interest – 7790, 7700 & 200-day SMA

FXTM’s FRA40 moved higher on Monday as markets digested the unexpected result of France’s legislative election.

The left-wing coalition won the largest amount of seats but could not secure a majority – resulting in a hung parliament outcome.

  • New Popular Front (left-wing): 188 seats
  • Macron’s centrist alliance (centrist): 161 seats
  • National Rally (far-right): 142 seats

Note: 289 seats are needed for absolute majority

With no party close to securing a majority, this could spell months of turmoil and political instability.

But this also means that neither the left nor right party can implement their plans into action, without support from others to pass legislation. This could cool fears around more spending and deeper deficits at a period where France remains under the European Union’s scrutiny for breaking budget rules.

Looking at the charts, the FRA40 bounced from the 200-day SMA on Monday morning with prices trading above 7700 as of writing. Despite the political gridlock down the road, the overall market reaction seems positive.

  • Still, bulls will need to secure a solid daily close above 7700 to encourage an incline toward 7790 and the 50-day SMA at 7900.
  • Should 7700 prove to be a tough resistance, a decline back toward 7470 and 7400 could be on the cards.

Note: FRA40 tracks the underlying CAC 40 Index 

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
08 Jul

AUD/USD Hits Six-Month High Amid RBA Rate Hike Speculations

By RoboForex Analytical Department

The AUD/USD pair reached a six-month high of 0.6752, marking its fifth consecutive day of gains. The currency’s strength is largely driven by market expectations that the Reserve Bank of Australia (RBA) might diverge from the global trend of lowering interest rates, raising them in response to escalating inflation pressures. May’s CPI figures have intensified discussions around monetary tightening.

Market sentiment is split between expectations for a rate hike and maintaining the current rates at the RBA’s next meeting in August. High domestic yields draw international capital, boost the Australian dollar, and provide a haven from the political uncertainties in the US and Europe.

Moreover, a weaker US dollar, underscored by unimpressive economic data released on Friday, has also bolstered the AUD. This data reinforced the Federal Reserve’s dovish stance on monetary policy.

Technical analysis of AUD/USD

The market has established a broad consolidation pattern centred around 0.6723. Moving forward, there is a potential for an upward movement to 0.6822. Once this level is reached, a retraction to 0.6750 for a retest might occur, followed by a continuation of the upward trajectory towards 0.6858. This bullish outlook is supported by the MACD indicator, with its signal line positioned above zero and trending upwards.

The AUD/USD pair is currently challenging the 0.6757 level, with the potential to extend the rally towards 0.6806. Following this target, a pullback to 0.6757 could occur, setting the stage for another rise to 0.6822. The stochastic oscillator, situated above the 50 mark, suggests an imminent climb to 80, reinforcing the bullish momentum forecasted.

Traders and investors are closely monitoring developments, especially the upcoming RBA meeting, which could significantly influence the direction of the AUD/USD pair.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
08 Jul

Skepticism about Biden’s continued participation in the re-election campaign is growing in the US. In France, the elections ended with uncertainty

By JustMarkets 

On Friday, the Dow Jones (US30) Index gained 0.17% (for the week +0.73%), while the S&P 500 (US500) Index gained 0.54% (for the week +1.43%). The NASDAQ Technology Index (US100) closed positive 0.90% (for the week +2.58%). Stock indices rose moderately on Friday, with the S&P 500 (US500) and Nasdaq 100 (US100) setting new record highs. Stocks found support on Friday after the June US payrolls report bolstered the Fed’s outlook for interest rate cuts this year.

US non-farm payroll employment for June rose by 206,000, exceeding expectations of 190,000. However, May’s non-farm employment data was revised downward to 218,000 from the previously announced 272,000. In addition, the June unemployment rate unexpectedly rose by 0.1 to a 2–1.5 year high of 4.1%, indicating a weaker labor market than expected with no change at 4.0%. Average hourly earnings for June declined to 3.0% y/y from 4.1% y/y in May, which matched expectations and was the slowest growth rate in 3 years.

President Joe Biden has faced growing skepticism within his own party about his potential 2024 re-election campaign. Rep. Mike Quigley of Illinois and Rep. Angie Craig of Minnesota have publicly urged Biden to reconsider his intention to run for president again. Quigley and Craig’s calls for Biden to resign were a notable development given their status as members of his party. The growing voices of dissenters within the Democratic Party indicate a search for alternative strategies or candidates that could strengthen their chances in the upcoming electoral contest.

The price of Bitcoin (BTCUSD) fell more than 3% to a 4-month low on Friday. Concerns over the possible sale of Bitcoin by lenders and governments have put pressure on digital assets. Administrators of the bankrupt Mt Gox exchange are returning $8 billion of Bitcoin to creditors, and uncertainty over how much of that will eventually be sold is weighing on the overall market. According to Arkham Intelligence, a wallet linked to Mt Gox moved $2.7 billion worth of tokens on Friday. There were also signs that German authorities are preparing to sell some of the 50,000 bitcoins seized earlier from online criminals, putting pressure on Bitcoin.

Equity markets in Europe were mostly down on Friday. The German DAX (DE40) rose by 0.14% (week ended +1.31%), the French CAC 40 (FR40) closed down 0.26% (week ended +0.03%), the Spanish IBEX 35 (ES35) fell by 0.39% (week ended -0.57%), the British FTSE 100 (UK100) closed negative 0.45% (week ended +0.49%).

In France, opinion polls showed that no party is likely to win a clear majority in the parliamentary elections. The left-wing Alliance is projected to win up to 198 seats, Macron’s centrists are likely to win up to 169 seats, and Marine Le Pen’s far-right National Rally will come in third with up to 143 seats. The election results have raised fears of further political uncertainty and market volatility as France’s legislature will be in a vacuum, and the prospect of a left-wing government will raise fiscal risks.

The UK Labor Party returned to government for the first time since 2010 and promised to launch its plan to fix the economy. In particular, there are several difficult short-term decisions to be made on public sector pay, fuel duty, and health funding. Solving them will cost £10 billion, according to official estimates and think tank calculations. Another £20 billion or more will be needed for a long-term fix to public services, according to the International Monetary Fund. The question is how the new Chancellor of the Exchequer will be able to do this when the debt ratio is close to 100%, growth rates are anemic, and the tax burden is the highest in decades.

WTI crude oil prices fell below $83 a barrel on Monday, extending the previous session’s losses as traders continue to assess last week’s mixed US jobs data. The latest data has raised concerns that the US economy, the world’s largest oil consumer, could slow down and affect oil demand. In addition, the growing likelihood of a ceasefire in Gaza has dampened estimates of strong summer fuel demand.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) gained by 2.69%, China’s FTSE China A50 (CHA50) fell by 0.68%, Hong Kong’s Hang Seng (HK50) gained 1.23%, and Australia’s ASX 200 (AU200) was positive 0.71%.

The Australian dollar rose as high as $0.675, hitting new six-month highs amid expectations that the Reserve Bank of Australia (RBA) may fall behind the global rate-cutting cycle or even raise interest rates again on the back of strong inflation data for May. Markets currently rate the probability of the RBA raising rates at its next meeting in August as slightly less than even, while the likelihood of a rate cut this year has been ruled out.

S&P 500 (US500) 5,567.19 +30.17 (+0.54%)

Dow Jones (US30) 39,375.87 +67.87 (+0.17%)

DAX (DE40) 18,475.45 +24.97 (+0.14%)

FTSE 100 (UK100) 8,203.93 −37.33 (−0.45%)

USD Index 104.88 −0.26 (−0.24%)

Important events today:
  • – German Trade Balance (m/m) at 09:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
05 Jul

Bitcoin is down to $55,000. Switzerland is seeing a further decline in inflation

By JustMarkets 

The US stock market did not trade yesterday due to the US Independence Day celebrations.

On Friday, the dollar index held near 105, hovering at three-week lows as investors await the release of an important US jobs report expected to show further signs of a cooling labor market, supporting the view that the Federal Reserve will soon start cutting interest rates. Earlier this week, data indicated an unexpected contraction in service sector activity and disappointing US private sector employment figures, supporting a dovish view of Fed policy. Markets currently estimate the probability that the Fed will begin cutting rates in September at around 73%.

Bitcoin (BTC/USD) fell below $55,000 on Friday, hitting its lowest level since late February, and has lost about 13% this week, which analysts attributed to further liquidation by leveraged investors. The collapse has also been exacerbated by concerns that the payment by bankrupt Japanese exchange Mt. Gox of more than $9 billion in bitcoins to some 127,000 creditors is likely to trigger massive profit-taking. Analysts speculate that markets are trying to get ahead of the lenders’ flows, causing prices to plummet. Moreover, billionaire Bitcoin investor Peter Thiel recently revealed that he sold most of his shares due to expectations of increased volatility. The second largest cryptocurrency by market capitalization, Ethereum (ETH/USD), also fell about 16% this week despite expectations that US regulators will approve the first Ethereum spot exchange-traded funds later this month.

Equity markets in Europe mostly rose yesterday. Germany’s DAX (DE40) added 0.41%, France’s CAC 40 (FR40) closed up 0.83%, Spain’s IBEX 35 (ES35) increased by 0.09%, and the UK’s FTSE 100 (UK100) closed positive 0.86%.

Polling companies predict that Marine Le Pen’s Rassemblement Nationale will not win an absolute majority in Sunday’s French legislative elections. Four polls released on Wednesday and Thursday suggest the far-right group and its allies could win between 190 and 250 of the 577 seats in the National Assembly. That is well below the 289 seats that would allow it to pass bills and push its agenda easily. A second round of snap elections will be held on Sunday.

The UK also voted yesterday. The exit polls’ results are clear: Labor will rule with a significant majority for the next five years. Analysts see this political shift as favorable for the British pound, equities, and investment in the UK as a whole, as it revives the UK’s reputation as a safe-haven.

Swiss inflation unexpectedly declined, which is encouraging for Swiss National Bank officials who have lowered borrowing costs for two consecutive meetings. Consumer prices in June were 1.3% from a year earlier. That’s less than economists had expected and below May’s 1.4%, the fastest pace this year. A 0.2% year-on-year decline in the cost of goods contributed to the slowdown, while services rose by 2.4%. Core inflation also fell to 1.1%, defying expectations of an acceleration.

WTI crude oil prices held near $84 per barrel on Friday and were set to rise for the fourth consecutive week as lower US crude inventories and signs of strong seasonal demand supported oil prices. The US crude prices were up about 3% this week. The US EIA reported that US crude oil inventories fell by 12.2 million barrels last week, well above expectations of a 680,000 barrel decline. In addition, escalating geopolitical tensions in the Middle East heightened concerns over oil supplies following reports that Israel killed a senior Hezbollah commander, prompting Hezbollah to retaliate near the border.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) rose by 0.82%, China’s FTSE China A50 (CHA50) fell by 0.08%, Hong Kong’s Hang Seng (HK50) added 0.28%, and Australia’s ASX 200 (AU200) was positive 1.19%.

Japan’s index of leading economic indicators, which gauges the economic outlook several months ahead based on data such as job offers and consumer sentiment, rose to 111.1 in May 2024 from a final reading of 110.9 in the previous month, the lowest in three months.

S&P 500 (US500) 5,537.02 0 (0%)

Dow Jones (US30) 39,308.00 0 (0%)

DAX (DE40) 18,450.48 +75.95 (+0.41%)

FTSE 100 (UK100) 8,241.26 +70.14 (+0.86%)

USD Index 105.13 −0.28 (−0.26%)

Important events today:
  • – German Industrial Production (m/m) at 09:00 (GMT+3);
  • – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
  • – US Unemployment Rate (m/m) at 15:30 (GMT+3);
  • – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
  • – Canada Ivey PMI (m/m) at 17:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Cryptocurrencies Financial News
05 Jul

Week Ahead: US500 set for major pullback?

By ForexTime 

  • US500 gains 15% in first half of 2024
  • April only negative trading month this year
  • US CPI, Powell Testimony & Big bank earnings in focus
  • Bullish but RSI overbought on multiple timeframes
  • Technical levels – 5600, 5500 & 5460

The UK general election is done and dusted with Labour securing a landslide victory as widely expected.

But the political risks don’t end there…

Just across the English Channel, France will hold the second and final round of its legislative elections this Sunday. And if the far-right National Rally wins an absolute majority, that shocker could see the FRA40 plunging to its year-to-date low.

Speaking of indices, FXTM’s US500 continues to dazzle markets with record highs!

And could see more volatility this afternoon thanks to the US jobs report (Friday 5th July). But even as anticipation mounts, investors are bracing for more action in the week ahead:

Sunday, 7th July

  • FRA40: Second round of French legislative elections

Monday, 8th July

  • JP225: Japan current account

Tuesday, 9th July

  • AU200: Australia consumer confidence
  • CNH: China aggregate financing, money supply, new yuan loans
  • TWN: Taiwan trade
  • US500: Fed Chair Jerome Powell testimony

Wednesday, 10th July

  • CN50: China PPI, CPI
  • JP225: Japan PPI
  • NZD: RBNZ rate decision
  • US500: Fed Chair Jerome Powell testimony, Fed speech

Thursday,11th July

  • GER40: Germany CPI
  • JP225: Japan core machine orders
  • NZD: New Zealand food prices
  • ZAR: South Africa manufacturing production
  • UK100: UK industrial production
  • US500: US June CPI report, Fed speech

Friday, 12th July

  • SG20: Singapore GDP
  • CN50: China trade
  • JP225: Japan industrial production
  • USDInd: US University of Michigan consumer sentiment, PPI
  • US500: JPMorgan, Citigroup, Wells Fargo earnings

All eyes will be on the incoming US inflation data, Powell’s testimony and earnings announcements by big US banks which could move the US500.

With the Relative Strength Index (RSI) signalling that prices are heavily overbought, could a technical pullback be on the horizon?

Note: A pullback is a temporary pause or decline in an asset’s overall bullish trend.

 

These 3 factors may influence the US500 outlook in the week ahead:

    1) US June CPI report

The incoming US Consumer Price Index (CPI) is likely to impact bets around when the Fed will start cutting interest rates in H2.

Markets are forecasting: 

  • CPI year-on-year (June 2024 vs. June 2023) to cool 3.1% from 3.3% in the prior month.
  • Core CPI year-on-year to remain unchanged at 3.4%.
  • CPI month-on-month (June 2024 vs May 2024) to rise 0.1% from 0% in the prior month.
  • Core CPI month-on-month to remain unchanged at 0.2%.

Expectations around lower US interest rates have been one of the driving forces behind the US500 rally in 2024. This is because the index has a handful of tech stocks that remain sensitive to US rates. Digging deeper, tech accounts for 33% of the US500 value!

  • The US500 could dip if the inflation numbers print above market forecasts.
  • Should the CPI report show more evidence of disinflation, the US500 may receive a boost.

Note: Before the key US inflation data on Thursday, the US500 may be influenced by Fed Chair Jerome Powell’s congressional testimony earlier in the week. Should he strike a dovish tone, US equity bulls are likely to receive a boost, and vice versa.

 

    2) Big bank earnings

It’s that time of the year again…

Second quarter earnings season kicks off on Friday 12th July, led by the biggest US banks.

Heavyweights such as JPMorgan, Wells Fargo and Citigroup and will be under the spotlight. Investors will closely comb over their earnings for fresh insight into the health of US banks which can be used to gauge the health of the US economy.

When factoring in how financial stocks make up over 12% of the US500, the incoming bank earnings could spark some volatility.

  • US500 may push higher if bank earnings beat estimates.
  • Should earnings disappoint, US500 bears could return to the scene.

 

    3) Technical forces

The US500 is firmly bullish on the weekly and daily timeframe. However, the Relative Strength Index (RSI) is above 70 – indicating that prices are heavily overbought.

Note: US500 tracks the underlying S&P 500 index

After recently hitting record highs, the index is trading around unchartered territories.

  • Should 5500 prove to be reliable support, bulls could challenge 5600.
  • A decline below 5500 may open a path toward 5460 and 5400.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Stock Market News
05 Jul

Gold Maintains Upward Trend as Market Anticipates US Jobs Data

By RoboForex Analytical Department

Gold prices have continued their ascent, with a troy ounce of the precious metal reaching USD 2363. This rise is primarily fuelled by anticipated US employment data for June, which could significantly influence the Federal Reserve’s rate decisions.

Recent US economic indicators, including a contraction in the service sector and weaker-than-expected private sector employment figures from ADP, have painted a dovish picture regarding the Fed’s upcoming monetary policy moves. These factors contribute to the prevailing sentiment that the Fed might lower interest rates, with market probabilities favouring a cut by September currently standing at 73%.

Furthermore, ongoing political uncertainties in Europe, especially in France and the UK, affect the EUR exchange rate, thereby impacting the USD and indirectly influencing gold prices. Additionally, persistent geopolitical tensions in the Middle East continue to drive demand for safe-haven assets like gold.

Technical analysis of XAU/USD

Gold (XAUUSD) is currently undergoing a correction that is anticipated to conclude at the level of 2370.70. Post-correction, the market might experience a decline towards 2295.00. A break below this could extend losses to 2222.22, setting a local target. This bearish potential is supported by the MACD indicator, which, although above zero, shows signs of peaking.

On the hourly chart, gold formed a tight consolidation around 2345.70 and breached the 2366.26 level upward, setting a local high. A corrective move down to 2345.70 is likely, followed by a potential rise to 2370.70, completing the current correction phase. Subsequently, the market might prepare for a new downtrend. The Stochastic oscillator, currently above 80, suggests an impending downturn, reinforcing the likelihood of a corrective decline.

Investors and traders will closely monitor the release of the US jobs report, given its potential to significantly sway Federal Reserve policy and, by extension, gold prices.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Metals
03 Jul

Natural gas prices fall to a 7-week low. Tesla shares surge amid rising sales

By JustMarkets

The Dow Jones (US30) Index added 0.41% at Monday’s close, while the S&P 500 (US500) Index gained 0.62%. The NASDAQ Technology Index (US100) closed positive 0.84% on Tuesday. Stock indices ended Tuesday’s trading with moderate gains. Stocks found support on Tuesday thanks to lower bond yields after Fed Chairman Powell said prices show signs of resuming a disinflationary trend.

Tuesday’s US economic news was hawkish for Fed policy and bearish for stocks after JOLTS job openings for May unexpectedly rose by 221,000 to 8.140 million, indicating a strengthening labor market versus expectations of a decline to 7.946 million.

Tesla (TSLA) stock price rose more than 10% to a 5-month high and led gains in the S&P 500 and Nasdaq 100 after the company reported second-quarter vehicle shipments of 443,956 units, beating the consensus forecast of 436,000 units. Bank of America (BAC) shares closed higher by more than 2% after Seaport Global Securities upgraded the stock to “buy” from “neutral” with a $48 price target. PayPal Holdings (PYPL) closed with an increase of more than 2% after Susquehanna upgraded the stock to positive from neutral with a $71 price target. Shares of Nike (NKE) closed down more than 1% after RBC Capital Markets lowered its price target on the stock to $75 from $100.

Equity markets in Europe mostly fell yesterday. Germany’s DAX (DE40) fell by 0.69%, France’s CAC 40 (FR40) closed down 0.30%, Spain’s IBEX 35 (ES35) lost 1.30%, and the UK’s FTSE 100 (UK100) closed negative 0.56%. European stocks fell on Tuesday amid hawkish comments from ECB President Lagarde, who said on Monday night that the ECB does not yet have sufficient evidence that inflation threats have passed, reinforcing expectations that the ECB will delay further interest rate cuts. European stocks also declined as political uncertainty in France remains high ahead of the second round of parliamentary elections this Sunday.

The Eurozone Consumer Price Index for June declined to 2.5% y/y from 2.6% y/y in May, which was in line with expectations. However, core CPI for June rose 2.9% y/y, unchanged from May and exceeding expectations of a decline to 2.8% y/y. ECB Governing Council spokesman Simkus said yesterday that core inflation is the “most important” indicator that will force the ECB to act and that the ECB will not rush to lower borrowing costs. Policymakers are looking at September and the months ahead for further potential interest rate cuts. Swaps estimate the odds of a 25 bps ECB rate cut at 7% for the July 18 meeting and 65% for the September 12 meeting.

WTI crude oil prices retreated from a 2-month high on Tuesday and declined after Russian crude exports rose to a 2-month high. Oil initially moved higher on Tuesday due to rising tensions in the Middle East, with Israel close to a full-scale war with Hezbollah in Lebanon and Houthi rebels in Yemen stepping up attacks on commercial ships in the region. According to API data, the US crude inventories fell sharply by 9.163 million barrels in the week ended June 28, the largest weekly decline since early August 2023 and well above market expectations for a 0.15 million barrel drop.

Natural gas prices fell for the sixth straight session on Tuesday, hitting a seven-week low. They remain under pressure as US storage inventories are +20.6% above the 5-year seasonal average, indicating ample supplies. However, the forecast for hot summer temperatures in the US is a favorable factor for natural gas prices in the coming weeks.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 1.12%, China’s FTSE China A50 (CHA50) gained 0.78%, Hong Kong’s Hang Seng (HK50) added 0.29%, and Australia’s ASX 200 (AU200) was negative 0.42%.

In New Zealand, the latest economic data fell short of expectations. Tuesday’s business survey showed a significant drop in confidence in the second quarter due to high interest rates weighing heavily on demand. Markets are betting that the Reserve Bank of New Zealand (RBNZ) will cut rates as early as October.

The Caixin China Services PMI fell to 51.2 in June 2024 from May’s 10-month high of 54.0, below the forecast of 53.4. This is the 18th consecutive month of growth in service sector activity.

S&P 500 (US500) 5,509.01 +33.92 (+0.62%)

Dow Jones (US30) 39,331.85 +162.33 (+0.41%)

DAX (DE40) 18,164.06 −126.60 (−0.69%)

FTSE 100 (UK100) 8,121.20 −45.56 (−0.56%)

USD Index 105.69 −0.21 (−0.20%)

Important events today:
  • – Japan Services PMI (m/m) at 03:30 (GMT+3);
  • – Australia Retail Sales (m/m) at 04:30 (GMT+3);
  • – China Caixin Services PMI (m/m) at 04:45 (GMT+3);
  • – German Services PMI (m/m) at 10:55 (GMT+3);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
  • – UK Services PMI (m/m) at 11:30 (GMT+3);
  • – Eurozone Producer Price Index (m/m) at 12:00 (GMT+3);
  • – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
  • – US Initial Jobless Claims (m/m) at 15:30 (GMT+3);
  • – US Trade Balance (m/m) at 15:30 (GMT+3);
  • – US ISM Services PMI (m/m) at 17:00 (GMT+3);
  • – Eurozone ECB President Lagarde Speaks at 17:15 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 19:00 (GMT+3);
  • – US FOMC Meeting Minutes at 21:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
03 Jul

UK general election: What you need to know

By ForexTime 

  • Opinion polls point to landslide Labour victory
  • Unexpected results could trigger volatility on GBP & UK100
  • Bloomberg FX model: 77% GBPUSD – (1.2569- 1.2800)
  • UK100 under pressure with W1 support at 8100

Millions of voters in Britain will be heading to the polls tomorrow!

And the outcome may shape the UK’s outlook over the next few years.

Here, we’ll break down what exactly is going on and how it could impact your trading.

 

What is happening?

On Thursday 4th July, Britons will elect the 650 MPs who sit in the House of Parliament.

The political party that wins at least 50% of seats will form the new government, and its leader the Prime Minister.

Polling stations open at 7am until 10pm UK time.

 

The lowdown…

On May 22, 2024, UK Prime Minister surprised the public by announcing elections will be held on July 4th despite having until January 2025.

Who are the major players?

  • Rishi Sunak: Conservative leader
  • Keir Starmer: Labour leader
  • Ed Davey: Liberal Democrats
  • Nigel Farage: Reform UK
  • John Swinney: SNP party
  • Carla Denyer: Green party

According to opinion polls, the opposition Labour Party leads the Conservatives by around 20 points and is on course for a historic landslide victory.

 

What does this mean?

It could mean Labour returns in power for the first time since 2010 when led by Gordon Brown.

 

What could go wrong?

Polls have been wrong before with elections full of surprises.

  • Despite what the polls are showing, the current government (Conservatives) stays in power.
  • Or a hung parliament situation where no party has a majority of seats – leading to coaling governments after the election. The last time this happened was in 2017.

 

How will this impact UK markets  

Broadly speaking, the market-friendly outcome appears to be a Labour victory.

This is based on markets expecting little change in fiscal policy in the near future. In addition, an incoming Labour-led government would seek to adopt closer ties with the EU – possibly boosting confidence in the UK economic outlook in the medium to longer term.

 

How about the Pound & FXTM’s UK100?

  • In the short term, a Labour win could boost the British Pound but hit the UK100.
  • A shock result that sees the current government stay in power may weaken the Pound, supporting the UK100 as a result.

Note: Over 80% of the revenues from FTSE100 companies come from outside of the UK.

So essentially, when the pound appreciates, it results in lower revenues for those companies that acquire sales from overseas – dragging the UK100 lower as a result. The same is true vice versa

 

Technical outlook

GBPUSD

Prices remain in a wide range on the weekly charts with support at 1.2600 and resistance at 1.2800.

  • A breakdown below 1.2600 could see a decline towards 1.2500
  • Should 1.2600 prove to be reliable support, prices may retest 1.2800

According to Bloomberg’s FX forecast model, there’s a 77%% chance that GBPUSD trades within the 1.256- 1.2800 range over the next one-week period.

UK100

FXTM’s UK100 is under pressure on the weekly charts with bears eyeing the 8100 level.

  • A solid break below 8100 could signal a decline toward 8020 and 7900.
  • Should 8100 prove to be reliable support, prices may rebound toward 8250.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Financial News
03 Jul

AUD/USD Sees Uptick Amidst Mixed Sentiment

By RoboForex Analytical Department

AUD/USD has climbed to 0.6676 yet remains in a “sideways” pattern, indicating a lack of clear directional momentum in the market.

The Australian dollar’s appreciation is linked to a softening in the US dollar’s stance, influenced by remarks from Federal Reserve Chair Jerome Powell. Powell highlighted the need for further economic data to assess the disinflationary trends, suggesting a cautious approach to rate adjustments. This uncertainty around US monetary policy has led to a dip in the USD, boosting AUD.

Conversely, the Reserve Bank of Australia (RBA) maintains a vigilant stance on inflation, with recent minutes suggesting a potential rate hike if inflationary pressures escalate. This possibility lends some support to the Australian dollar. Recent economic data from Australia, including a spike in May’s retail sales and continued private sector growth in June, further bolsters this perspective.

Market speculation hints at a potential RBA rate increase in August, with forthcoming data likely to provide clearer indicators of this likelihood.

Technical analysis of AUD/USD

The AUD/USD pair navigates within a broad consolidation range, forming a diverging “Triangle” around 0.6662. Currently, there is potential for the price to ascend to 0.6702. Upon reaching this level, a retraction to 0.6662 is anticipated, with a potential downward break targeting 0.6555 before resuming upward movements towards 0.6737. The MACD indicator supports this growth scenario, with its signal line positioned above zero and upwards.

On the hourly chart, a tight consolidation has been observed around 0.6662. The expected trajectory involves an ascent to 0.6690, potentially extending to 0.6702. This growth forecast is underscored by the Stochastic oscillator, whose signal line is above 80, suggesting an impending downward adjustment to around 50.

Market outlook

As the global financial landscape navigates through mixed economic signals and central bank policies, the AUD/USD pair will likely continue to experience volatility. Investors and traders will closely monitor upcoming economic releases and central bank communications to gauge the potential shifts in monetary policy, especially from the RBA and the Fed, which could significantly influence the currency pair’s movements in the near term.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

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