Daily Analysis

[Zforex]

"Central Bank Calls for Rate Hikes to Tackle Inflation as Global Markets React"

Fed officials, stressed the importance of implementing additional rate hikes to tackle inflation and achieve the central bank's targets in their speeches on Monday. Mary Daly, President of the Federal Reserve Bank of San Francisco, expressed the likelihood of needing "a couple more rate hikes over the course of this year." Similarly, Loretta Mester, Cleveland Fed President, emphasized the significance of higher rates to maintain sustainable inflation and suggested that the funds rate should rise further and stabilize to gather more economic information. Fed Vice Chair for Supervision Michael Barr highlighted the need for caution and resilience by advocating for increased capital for large U.S. banks.
Meanwhile, in Asia, investors await concrete measures from Beijing to strengthen the country's sluggish recovery, as China's struggling economy continues to impact markets. Chinese state-run financial newspapers have indicated potential property support policies and initiatives to improve business confidence.
In the UK, wage growth data, which Bank of England Governor Andrew Bailey noted is contributing to inflation, underscores the pressure for higher interest rates. This data will play a crucial role in shaping the central bank's decision on rates in August, and the pound has reached its highest level against the dollar since April 2022.
Additionally, Germany's annual inflation rate for June 2023 was confirmed at 6.4%, rebounding from May's low of 6.1%. After three months of deceleration, inflation has slightly risen again, primarily driven by food prices. This data suggests that inflation in the EU may remain persistent, potentially leading the European Central Bank to consider further rate increases.
Market anticipation is centered on tomorrow's U.S. Consumer Price Index (CPI) data, which will provide insights into the direction of inflation and influence the Federal Reserve's decisions in upcoming meetings, given that the possibility of two rate hikes remains.

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[Zforex]

" US Inflation Expectations, RBA and RBNZ Policies, and Japan's Wholesale Inflation Slowdown"
Economists expect the U.S. inflation rate for June to fall slightly to 5%, down from 5.3% in May, based on a Reuters poll. The inflation print, along with producer prices data on Thursday, will give clues to the Federal Reserve’s path for rate hikes.
In Japan, the Nikkei 225 slid 0.81% to end at 31,943.93 —the first time in over a month that it finished lower than 32,000 points, while the Topix was down 0.67% and closed at 2,221.48.
The country saw wholesale inflation slow to its lowest pace in six months, with the corporate goods price index rising just 4.1% year on year, official data showed.
Reserve Bank of Australia (RBA) governor Philip Lowe has stated that although the bank has maintained interest rates at 4.1% in its recent meeting, it might be necessary to tighten monetary policy further in order to bring inflation back to its target level in a reasonable timeframe. Lowe mentioned that any future actions taken by the RBA would depend on the evolving state of the economy and inflation. The RBA's board will review updated economic forecasts and reassess the balance of risks in its next meeting on August 1. By that time, new data on inflation, the global economy, the labor market, and household spending will have been released, providing crucial information for the bank's decision-making process.
The Reserve Bank of New Zealand (RBNZ) has decided to keep its benchmark interest rate unchanged at 5.5%, making it the first time the bank has paused since October 2021. The RBNZ stated that the current interest rate level is effectively limiting spending and inflationary pressure as expected. However, the central bank emphasized that interest rates should continue to remain at a restrictive level in the foreseeable future to ensure that consumer inflation returns to the desired target range of 1-3%.
Japan's corporate goods price index, which serves as a wholesale inflation indicator, experienced a slower year-on-year growth rate of 4.1% in June. This marks the sixth consecutive month of decelerating growth. The figure is lower than May's revised rate of 5.2% and represents the slowest inflation rate observed since April 2021. The index measures the prices that companies charge each other for their goods and services.
The Bank of England on Wednesday said British banks are strong enough to support households and businesses through the squeeze of higher borrowing costs and the rising cost of living.
In its Financial Stability Report, the central bank noted that U.K. households and businesses are in a safer position than they were before the financial crisis, with a lower proportion of household income spent on mortgage payments and a lower proportion of business spend used to service debt.

The USD Index has been declining for four consecutive days, indicating investor expectations of only one more interest rate hike from the Federal Reserve (Fed) by the end of the year. Investors are anticipating inflation data, with analysts predicting a 0.3% monthly increase in both headline and core CPI inflation for June. However, the Fed needs to see a slowdown in core services and softer labor market conditions to be confident in reaching its 2% inflation target. In the Eurozone, German inflation is at 6.8%, leading the European Central Bank (ECB) to consider further interest rate hikes to control inflation. ECB President Christine Lagarde has already expressed the necessity of raising interest rates to address persistent inflation pressures.
The EUR/USD continue the bullish trend and reached the 1.1400 level as waiting for more momentum to reach the 1.1100 historical resistance level. Today Dat may help or not the EURUSD continue up but the actual long bullish trend is healthy and strong.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1100	1.1085	1.1040	1.1000	1.0920	1.0880

The Pound Sterling (GBP) faced resistance near a 15-month high at 1.2970 due to strong labor cost data in the UK. The GBP/USD pair gained strength as the possibility of a significant interest rate hike by the Bank of England (BoE) increased. UK firms are offering higher wages to attract talent amidst labor shortages. Although the jobless rate has risen, firms are avoiding credit due to higher interest rates. The BoE is likely to consider a rate hike as higher wage pressures can counterbalance the impact of rising unemployment.
As GBP/USD is close to reaching the historical level of 1.3000 with strong momentum for short- and long-term reading. Today CPI Data from the US may be positive or negative for the pair so watching the support and resistance levels will be crucial as volatility will be high.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3310	1.3200	1.3000	1.2650	1.2540	1.2460

The US Dollar Index (DXY) has continued its correction, nearing 101.37. Previously driven by the cautious market sentiment due to the Fed's tightening policies, it is now under pressure as expectations of only one more interest rate hike remain.
Looking ahead, there is anticipation for action ahead of the US Consumer Price Index (CPI) data for June. Analysts expect a significant decrease in monthly core CPI inflation to 0.2%, which would be welcomed by the Fed. Annualized core inflation is expected to decline to 4.9%, while headline inflation is projected at 3.1%, moving closer to the target.
Despite the Producer Price Index (PPI) figures for June falling short of estimates, the Japanese Yen has shown strength. Goods and services prices at factory gates contracted by 0.2% instead of expanding by 0.1% as expected. Annualized PPI has also decelerated to 4.1% compared to consensus and previous releases of 5.1%.
The USD/JPY correction turned into a continuous selloff, with the pair breaking through all support levels in the past four days. Currently, we are approaching the 139.00 level, which coincides with the current trend line on the daily chart. However, there is no guarantee that it will hold, as the solid historical level at 137.70 poses a potential barrier.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
142.00	141.20	140.22	139.00	137.70	136.00

The precious metal is gaining momentum, poised to break above $1,940.00, as the US Dollar Index (DXY) faces significant pressure amid expectations of a slowdown in the United States Consumer Price Index (CPI) data.
While the USD Index has found some support near 101.35, the overall bias remains bearish. Economists at Commerzbank suggest that it might be premature to dismiss the dollar entirely, considering that the recent labor market report was not as negative as anticipated. However, it is expected that the tight labor market will prompt the Federal Reserve (Fed) to raise interest rates again at the end of July.
Investors are currently focused on the upcoming inflation data, with expectations of steady monthly and core inflation rates of 0.3%. Annualized figures for headline and core CPI are projected to soften to 3.1% and 5.0% respectively. Additionally, the release of the Fed's Beige Book will also garner attention from investors.
Gold went back toward the 1940 resistance level building a solid reversal pattern. The challenge will be the break of the actual 1940 level.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1980	1960	1940	1931	1920	1904

European shares saw modest gains on Wednesday ahead of the release of crucial U.S. inflation data, which will determine the future of the Federal Reserve's monetary policy tightening. The data, expected to show a moderation in the consumer price index (CPI) to 3.1% year-on-year in June, could impact the Fed's decision on rate hikes after July.
In other news, Norway's DNB bank reported better-than-expected quarterly earnings, benefiting from a strong economy and higher interest rates. Additionally, there was notable merger and acquisition activity as Thales initiated talks to acquire Cobham Aerospace Communications for $1.1 billion, a move deemed positive for Thales. Meanwhile, AXA is reportedly considering selling its property reinsurance business to reduce disaster risk, with the unit valued at around $2 billion at the end of December, according to Reuters.
The DAX and other European markets are trading higher in anticipation of a potential slowdown in US inflation data. However, the current price action remains fragile and is contingent upon the data release. Selling pressures are still present, and a break above the 16400 level is needed to alleviate them.

Resi Level 3	Resi Level 2	Resi Level 1	Suppo level 1	Suppo level 2	Suppo level 3
16800	16600	16370	15650	15400	15200

 

[Zforex]

" US Inflation Expectations, RBA and RBNZ Policies, and Japan's Wholesale Inflation Slowdown"
Asia-Pacific markets rose across the board Thursday after the U.S. inflation rate for June came in lower than expected at 3%, the smallest year-over-year increase in two years.
This figure fell below economists' expectations, who had forecasted it to be 3.1% in a poll conducted by Dow Jones.
Month over month, the inflation rate rose 0.2%, less than forecast. Core CPI — which strips out volatile food and energy prices — also rose less than expected.
In Asia, Hong Kong’s Hang Seng index surged 2.46% and led gains in the region, while the Hang Seng Tech index surged over 3%.
Mainland Chinese markets were also all up, with the Shanghai Composite gaining 1.26% and the Shenzhen Component seeing a larger gain of 1.63%. China’s June trade data came in below expectations in June, with exports recording its biggest decline in more than three years. China’s trade surplus for June came in at $70.62 billion in June, higher than the $65.81 billion recorded in May, but lower than the $74.8 billion expected by economists polled by Reuters. Exports and imports also fell more than expected, with exports dropping 12.4% from a year ago and imports 6.8% lower compared with the same period last year.
The U.K. economy contracted 0.1% in May, official figures showed, though this was less than the 0.3% month-on-month contraction forecast in a Reuters poll of economists. It comes amid intense focus on the country’s ongoing inflation battle, particularly after this week’s strong wage growth data.
While markets are still pricing in a more than 92% probability of a 25 basis point rate rise from the Federal Reserve this month, according to CME’s FedWatch tool, the slowdown in inflation boosted economic sentiment and raised hopes of a less aggressive path ahead.

The EUR/USD pair is steadily gaining momentum as a result of the weak United States Consumer Price Index (CPI) data, suggesting that the Federal Reserve (Fed) only has one interest rate hike option remaining by the end of the year. With the US Dollar Index (DXY) experiencing a decline and the market sentiment being optimistic, the major currency pair has reached a level close to 1.1150.
In June, both the monthly headline and core inflation in the US showed a moderate pace of 0.2%, with a significant decrease in the annualized figures attributed to the decline in prices of used motor vehicles. Consequently, the US Dollar Index (DXY) has experienced a notable drop, approaching 101.40, and is expected to continue its downward trend.
Meanwhile, the European Central Bank (ECB) is anticipated to raise interest rates further in order to address persistent inflationary pressures. ECB President Christine Lagarde has already emphasized the need for additional interest rate adjustments.
Today PPI will be well watched to confirm that the rapid slowdown in inflation is broadly felt on consumers as for businesses.
The EUR/USD pair experienced a significant bullish surge of 1.20% in the last day, reaching a level of 1.1150. This increase occurred after breaking through the strong resistance level at 1.1080. Currently, the pair is testing the upper parallel of the current bullish channel line. It is likely that a correction will be necessary following such a substantial jump.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1200	1.1150	1.1100	1.1000	1.0920	1.0880

Official figures revealed that the U.K. economy contracted by 0.1% in May, which was lower than the Reuters poll of economists' forecast of a 0.3% month-on-month contraction. This contraction occurred at a time when there is significant attention on the country's ongoing battle with inflation, particularly following the release of robust wage growth data earlier this week.
Today, the Producer Price Index (PPI) data may confirm the previous day's Consumer Price Index (CPI) data, indicating a slowdown in inflation in the United States. This could potentially result in a more bullish market sentiment. The Bank of England (BoE) continues to grapple with the challenge of persistent inflation, which may necessitate further interest rate hikes. These actions would likely support the value of the pound and increase yields, possibly leading to the introduction of new fiscal policies as well.
The GBP/USD pair reached the significant historical level of 1.3000 and is currently undergoing a testing phase to determine if a breakout will occur. This situation arises as the dollar experiences its weakest performance in weeks, while the pound, in contrast, is being bolstered by positive economic data and the Bank of England's (BoE) plans to raise interest rates further.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3310	1.3200	1.3000	1.2650	1.2540	1.2460

The ongoing risk-on sentiment, characterized by a prolonged rally in equity markets, is suppressing the demand for the safe-haven Japanese Yen (JPY). This, coupled with oversold conditions on the hourly charts, has prompted some short-covering activity in the USD/JPY pair during intraday trading. The pair had experienced a sharp decline of around 700 pips in the past two weeks, starting from levels just above the psychological level of 145.00. However, given the prevailing bearish sentiment surrounding the US Dollar (USD), a significant recovery is unlikely despite these factors.
The USD Index (DXY), which measures the performance of the USD against a basket of currencies, currently lingers near its lowest level since April 2022. This is because investors are increasingly convinced that the Federal Reserve (Fed) will only raise interest rates once more this year. This belief was reinforced by the US Consumer Price Index (CPI) report released on Wednesday, which indicated a further moderation in consumer prices during June. Consequently, US Treasury bond yields continue to decline, exerting downward pressure on the USD and limiting any notable upside potential for the USD/JPY pair.
Furthermore, speculation that the Bank of Japan (BOJ) may adjust its ultra-loose monetary policy settings as early as this month could provide support to the JPY and impede substantial gains for the USD/JPY pair.
The USD/JPY pair has found support at the significant historical level of 138.00 following five consecutive days of losses. There is potential for a correction to occur from this current level, although the impact of the Producer Price Index (PPI) data remains uncertain in determining the direction. Additionally, the sell-off in yields is expected to influence the pair, considering the significant decline witnessed in the previous day's sell-off.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
142.00	141.20	140.22	139.00	138.00	136.00

The latest consumer inflation figures from the United States show that the Federal Reserve is likely to hold interest rates after a small increase at the July policy meeting. The Consumer Price Index (CPI) rose by 0.3% in June, with the yearly rate slightly lower than before. Core prices increased at the slowest rate since August 2021, and the US core CPI had the smallest increase in over two years. These trends suggest a cooling labor market, which allows the Fed to adopt a less aggressive stance. The gold price, which doesn't yield interest, benefits from this development. The decline in US Treasury bond yields and the weakened US Dollar also support the price of gold. Some technical buying and positive market sentiment contribute to the upward movement of gold, although further gains may be limited. Market participants are now awaiting the release of the Producer Price Index (PPI) and Weekly Initial Jobless Claims data, which will influence the dynamics of the US Dollar and provide additional momentum to the gold price.
Gold made a reversal breakout and continue going up toward the next resistance at 1970 which represent the upper parallel of the short-term bullish channel. The selloff in yields may help more gold to get more strength and today’s data may help. The long-term bearish trend seems stopped in the 1900 as the market is repricing and changing the view.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1982	1970	1960	1931	1920	1904

On Thursday, European shares experienced a slight increase, driven by optimism fueled by U.S. inflation data. This data fueled hopes that the Federal Reserve is nearing the conclusion of its tightening cycle initiated after the COVID-19 pandemic. However, the overall market enthusiasm was tempered by a range of mixed economic indicators.
During the previous trading session, the benchmark index recorded its largest percentage gain since early June. This surge was a result of U.S. consumer inflation decelerating faster than anticipated, reinforcing expectations that the Federal Reserve might halt its interest rate hikes after July.
Nevertheless, market sentiment was somewhat subdued by weak trade data from China. On the positive side, the contraction of Britain's economy in May was less severe than anticipated.
The DAX, along with other global indices, is showing positive growth today. However, a significant challenge lies ahead as it needs to surpass the 16,400 level. In the short term, the DAX remains bullish due to the prevailing risk-on sentiment in the markets, driven by the anticipation of the Federal Reserve concluding its rate hikes.

Resi Level 3	Resi Level 2	Resi Level 1	Suppo level 1	Suppo level 2	Suppo level 3
16800	16600	16370	15650	15400	15200

 

[Zforex]

"Asia-Pacific Markets Rise on Softer US Inflation Data, Global Stocks Gain Amid Signs of Inflation Slowdown"

Asia-Pacific markets experienced gains on Friday as new inflation data from the U.S. turned out to be softer than expected. This development has raised optimism that inflation may decrease without negatively impacting the labor market. Globally, stocks rose throughout the week due to the lower-than-expected U.S. consumer price index and producer price index, signaling a significant deceleration in inflation within the world's largest economy.
In June, the U.S. producer price index increased by a smaller margin than predicted, rising 0.1% year on year. The core PPI, which excludes volatile food and energy prices, also climbed by 0.1%, falling short of expectations.
Christopher Waller, a Governor of the Federal Reserve Board, expressed the belief that two more interest rate hikes are necessary to bring inflation down to the desired level. During a speaking engagement at New York University, he welcomed the recent reading of the consumer price index, which indicated a moderation in the inflation rate. However, he emphasized the importance of sustained improvement before expressing confidence in the deceleration of inflation.
The International Monetary Fund stated that China's growth is slowing due to weakened private investment, declining exports, and reduced domestic demand.
The Reserve Bank of Australia announced on Friday that Michele Bullock, the deputy governor, has been appointed as the new chief of the central bank, as revealed by the country's Treasury.
Investors have also been evaluating data from the U.K. this week. Wage growth in the country has been significant, raising concerns for the Bank of England as it grapples with the highest inflation among the Group of Seven nations. Meanwhile, the economy experienced a 0.1% contraction in May, slightly better than the consensus estimate of a 0.2% contraction.​

EURUSD

The US Dollar (USD) has continued its downward trend for the seventh consecutive day, driven by expectations of the Federal Reserve (Fed) soon concluding its policy-tightening measures. Investors are now strongly convinced that the US central bank will maintain interest rates at their current level for the remainder of the year, following the anticipated 25 basis points increase in July. This has resulted in a significant drop in US Treasury bond yields and has pushed the USD to a 15-month low. Consequently, this decline is considered a significant factor contributing to the strength of the EUR/USD pair.
In contrast, the minutes of the June meeting held by the European Central Bank (ECB) revealed that policymakers are determined to continue raising interest rates beyond July in order to address inflation and bring it back to the target level. It is worth noting that the ECB's economic projections in June indicated that inflation is expected to remain above the 2% target until the end of 2025. Despite emerging signs of an economic slowdown, this hawkish stance continues to bolster the euro (EUR) and provide additional strength to the EUR/USD pair.
The EUR/USD maintained its bullish momentum, reaching the 1.1245 level, which coincides with the upper parallel of the current bullish channel. The second leg of the movement is currently hovering around 3.70%, slightly higher than the previous leg's 3.50%. After this rapid bullish movement, a correction toward the 1.1100 level appears likely.​

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1200	1.1150	1.1100	1.1000	1.0920	1.0880

GBPUSD

The US Dollar (USD) remains under selling pressure, resulting in a 15-month low, as the market anticipates the Federal Reserve (Fed) concluding its policy tightening cycle. On the other hand, the British Pound (GBP) gains support amid speculation of further interest rate hikes by the Bank of England (BoE) to tackle inflation. This supports the GBP/USD pair's upward trend. Market sentiment indicates that the Fed will keep interest rates steady after an anticipated increase in July, while the BoE may raise rates to control demand and lower inflation. Economic data and consumer sentiment will influence the currency pair, but overall, the GBP/USD pair is set for strong gains and looks to end the week positively for the second consecutive time.
Similar to other major currency pairs, the GBP/USD faced resistance at 1.3150 after surpassing the significant level of 1.3000. A correction towards 1.3000 appears to be more likely. The next long-term resistance level is 1.3210, and additionally, we observe the 200MA on the weekly chart, where a candle closing above it is needed to confirm further upward movement.
​

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3310	1.3200	1.3000	1.2650	1.2540	1.2460

​

USDJPY

The Japanese Yen received a boost from a couple of developments in Japan. Firstly, there was a media report indicating that the Bank of Japan is likely to revise its inflation forecast for FY2023 to a level above 2% during the meeting scheduled for July 27 and 28. Until now, the Bank has consistently maintained its stance that the Consumer Price Index (CPI) would decline from around September/October this year. However, if this expectation is revised to a level above the 2% target, it would undermine one of the pillars supporting the continuation of ultra-loose monetary policy.​

Additionally, during the session, Bloomberg conducted an interview with Hideo Hayakawa, a former chief economist and director at the Bank of Japan. Hayakawa expressed his anticipation that the Bank of Japan's policy board "will make some kind of adjustment to YCC this month," suggesting that adjusting the yield control by setting the tolerance band for the 10-year yield from 0.5% on either side of zero to 1% is a likely approach.
Shifting the focus to central banks, Federal Reserve Board Governor Christopher Waller addressed his economic and policy outlook during a speech before the Money Marketeers of New York University in the evening, Eastern time. Please refer to the previous posts for his specific remarks, but notably, Waller mentioned that the upcoming September Federal Open Market Committee (FOMC) meeting is significant. However, he also highlighted that if the next two Consumer Price Index (CPI) readings resemble the previous two, the data would suggest a possible halt to certain actions.
​

The USD/JPY pair has received support at the notable historical level of 138.00 after experiencing six consecutive days of decline. Currently, a corrective movement is underway, with the initial level located at 138.70, followed by 140.25. Additionally, both the 2-year and 10-year yields are undergoing corrections, which appears to be beneficial for the pair as well.
​

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
142.00	141.20	140.22	139.00	138.00	136.00

Despite the release of the soft inflation and Producer Price Index (PPI) report for June, the precious metal has been unable to take advantage of the situation, indicating that household demand remains subdued and the path towards achieving the 2% inflation target remains intact.
Although the US Dollar Index (DXY) has experienced a significant decline, gold prices are struggling to recover. The DXY has dropped below the psychological level of 100.00 and is currently hovering around 99.65. The anticipation of only one interest rate hike announcement from the Federal Reserve (Fed) by the end of the year has caused a sharp decline in the USD Index.
Contrary to investors' expectations, Fed Governor Christopher Waller expressed confidence in the need for two additional interest rate hikes this year to curb inflation and bring it down to 2%. Waller's hawkish comments have contributed to a rise in US Treasury yields, with the yield on 10-year US Treasury bonds reaching approximately 3.77%.
Gold found strong resistance at the 1960 and formed a bearish pattern that may lead to a temporary correction toward the 1940. Gold is still bullish and may continue toward the next resistance of 1970 and followed by the 1980. But a first correction seems needed.
​

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1982	1970	1960	1931	1920	1904

European shares experienced a slight decline on Friday, although they were still on track to achieve their largest weekly percentage increase in more than three months. This optimistic outlook was fueled by expectations that the Federal Reserve would soon cease its interest rate hikes due to the alleviation of inflationary pressures.
Earlier this week, data regarding consumer and producer prices in the United States sparked speculation that the economy was entering a phase of disinflation, leading to the possibility of the Fed pausing its tightening measures shortly after July.

As the earnings season commences, luxury British retailer Burberry announced a notable 18% growth in sales revenue for the quarter ending on July 1.

The DAX faces a significant challenge of surpassing the 16,400 level. In the short term, the DAX remains bullish due to the prevailing risk-on sentiment in the markets, but Q2 earnings are awaited to confirm whether or not there will be more momentum.

Resi Level 3	Resi Level 2	Resi Level 1	Suppo level 1	Suppo level 2	Suppo level 3
16800	16600	16370	15650	15400	15200

 

[Zforex]

US INDICES

The S&P 500 futures saw a gain of 0.1%, while Nasdaq-100 futures experienced a slight increase of less than 0.1%. JPMorgan Chase saw a rise of over 2% in premarket trading after surpassing expectations with their earnings. The bank capitalized on higher interest rates and increased interest income. Additionally, Wells Fargo also rose over 3% in premarket trading, driven by better-than-expected earnings.
UnitedHealth shares climbed over 2% following the insurance giant's report of better-than-expected earnings and revenue. The company also raised the lower end of its full-year earnings guidance. Similarly, BlackRock experienced a rise of over 1% due to a significantly better-than-expected profit.
According to FactSet, analysts are anticipating a downturn this season, with a projected year-over-year decline of approximately 7% in S&P 500 earnings. If this materializes, it will represent the weakest earnings season since the second quarter of 2020 when S&P 500 profits plummeted by 31.6%.
Traders will also closely monitor the release of June import prices and the preliminary July results from the latest University of Michigan consumer sentiment report.
The breakout of the Nasdaq above the 15,200 level, fueled by improved sentiment, suggests that the next target could be around 15,800. The second-quarter earnings results and the growing confidence in AI as a new revenue source for technology companies and the economy as a whole might further support the Nasdaq's ascent to new highs.

USOIL:

On Thursday, several oilfields in Libya were shut down due to a protest by a local tribe following the kidnapping of a former minister. Additionally, Shell temporarily suspended loadings of Nigeria's Forcados crude oil due to a potential leak at a terminal. The disruption in Libya has halted the production of an estimated 370,000 barrels per day (bpd), while the Nigerian outage is expected to result in a loss of 225,000 bpd.
The price of WTI (West Texas Intermediate) has recently broken out above the resistance level at 72, indicating a potential shift in the oil market's direction. This breakout comes after a period of consolidation between 62 and 72 over the past two months. Presently, oil is encountering a resistance level of 76.00, and there is a chance of a correction, leading to a possible pullback towards 74.30.
Furthermore, Russian oil exports have significantly decreased. If this downward trend continues into the following week, it could potentially drive prices higher. Notably, Russian oil exports are expected to be reduced by 500,000 bpd in August.
Supporting the price of oil, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) released reports on Thursday, predicting a recovery in oil demand during the second half of the year, particularly in China, despite broader macroeconomic challenges.
In addition, Saudi Arabia and Russia, the world's largest oil exporters, have agreed this month to further deepen oil production cuts that have been in place since November last year, providing additional support to crude prices.
Oil reached a level of 77.25, where the 200-day moving average (200MA) acted as a resistance level, similar to the previous occurrence. This suggests that a correction back toward 74.20 is a possibility.

Cryptocurrency

While the crypto market is experiencing positive effects from the recently announced outcome of the Ripple-SEC case, resulting in a surge in the Ripple-affiliated XRP token, the leading cryptocurrency Bitcoin has also reached a new price high that has not been witnessed since last year. Bitcoin's price suddenly increased by 4.45%, reaching the $31,636 level, which had not been seen since June 1 of the previous year.
This significant surge in price was triggered not only by Ripple's partial victory over the SEC in court but also by the resumption of XRP trading on major exchanges, including Kraken, Bitstamp, Coinbase, and Crypto.com, one after another.
Currently, BTC reached a new level at 31800. Traders are closely monitoring the weekly chart, particularly looking for a breakout above the 100-day moving average (100MA). In the case of a breakout, it could potentially push the price toward the initial resistance level of 36,000.

 

[Zforex]

"Global Markets Respond to Lower Inflation and Speculations on Federal Reserve's Approach, while Asia-Pacific Markets React to China's GDP Miss"

The global markets experienced a boost from lower-than-expected inflation figures in the United States, alongside growing speculation of a less aggressive approach by the Federal Reserve in the future.

In Asia-Pacific, market performance on Monday was negative as investors analyzed important economic data from China. China's gross domestic product (GDP) for the second quarter grew by 6.3% compared to the previous year, falling short of the 7.3% forecast by analysts surveyed by Reuters.
The second quarter's GDP growth rate of 6.3% signifies a slower pace of expansion in comparison to the 2.2% growth recorded in the first three months of the year.
Additionally, the unemployment rate for young individuals aged 16 to 24 reached a new record of 21.3% in June.
Significantly, China, the world's second-largest economy, reported a second-quarter GDP growth of 6.3%, which was lower than economists' expectations. Furthermore, the People's Bank of China maintained its medium-term loan rates at 2.65% after providing 103 billion yuan ($14.43 billion) of one-year medium-term lending facility loans at that rate.
The upcoming week will witness a rise in earnings announcements, featuring results from Novartis, Ocado, and ASML in Europe, alongside major U.S. companies like Bank of America, Morgan Stanley, Tesla, Netflix, United Airlines, and IBM.
According to the International Monetary Fund, headline inflation appears to have reached its peak among the group of 20 nations. However, core inflation, particularly in advanced economies, remains significantly higher than the targets set by central banks.

EURUSD

The euro has gained significant strength due to the European Central Bank (ECB) expected to continue raising interest rates beyond July, as inflation in the Eurozone remains high. Headline inflation in the region currently stands at 5.5%, while core inflation, which excludes volatile oil and food prices, is at 5.4%. These figures are significantly higher than the desired rate of 2%.

The USD Index is anticipated to show strong movement following the release of the US Retail Sales data. According to consensus forecasts, monthly retail demand is expected to grow at a faster pace of 0.5% compared to the previous release of 0.3%. Retail demand, excluding automobiles, is projected to expand by 0.3%, an improvement from the previous release of 0.1%.

The EUR/USD encountered resistance near the upper boundary of the existing bullish channel at the 1.1250 level. There is a potential for a correction to occur, which could cause the price to move towards the 1.1150 level.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1200	1.1150	1.1100	1.1000	1.0920	1.0880

GBPUSD

Investors are directing their attention toward the upcoming release of the United Kingdom Consumer Price Index (CPI) data, scheduled for Wednesday at 06:00 GMT. The GBP/USD pair has received some support as investors are optimistic about the possibility of sustained high core inflation. They anticipate that this would compel the Bank of England (BoE) to continue its aggressive policy tightening measures in order to bring inflation back to desired levels.

However, as the central bank of the United Kingdom would have no choice but to raise interest rates further, households will have to face the consequences of increased borrowing costs and the impact of high inflation. Not only will this burden affect big-ticket purchases, but it will also extend to the housing sector. The corporate sector in the UK is expressing concerns, as they believe that the previous surge in business optimism observed during the spring has diminished due to the weight of inflation and rising interest rates.

The GBP/USD is undergoing a correction following its rise to the 1.3140 level, which corresponds to the upper boundary of the current bullish channel. It is more likely that the price will retrace towards the 1.3000 level, which is expected to act as new support.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3310	1.3200	1.3000	1.2650	1.2540	1.2460

USDJPY

There is a lack of economic indicators from Japan that could affect the monetary policy stance of the Bank of Japan, which remains extremely accommodative.

However, the focus will be on economic indicators from China, including Q2 GDP, industrial production, and retail sales, as they will set the tone for market sentiment. So far, the markets have not shown a flight-to-safety response, as expectations of a stimulus package from Beijing have mitigated the impact of weak Chinese data.

If the GDP and industrial production figures turn out to be notably weak, it could raise doubts about Beijing's ability to provide adequate support to its economy.

Additionally, the NY Empire State Manufacturing data for July will be closely monitored, but unless there is a significant decline, it is unlikely to have a notable impact on market risk sentiment.

The USD/JPY pair has received support at the notable historical level of 138.00 after experiencing six consecutive days of decline. Currently, a corrective movement is underway, with the initial level located at 138.70, followed by 140.25. Additionally, both the 2-year and 10-year yields are undergoing corrections, which appears to be beneficial for the pair as well.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
142.00	141.20	140.22	139.00	138.00	136.00

XAUUSD

The focus is on the positive US inflation data released on Friday and concerns surrounding China, which are receiving significant attention. These factors, along with the market's anticipation of a 0.25% increase in benchmark interest rates at July's Federal Open Market Committee (FOMC) monetary policy meeting, are exerting downward pressure on the gold price.

It's important to note that the two-week silence period for Fed officials ahead of the FOMC meeting allows the US Dollar to recover and weigh on the gold price recently. Additionally, comments from the International Monetary Fund (IMF) suggest inflation concerns are also impacting the XAU/USD price, despite a lackluster session and the US Dollar's inability to remain strong.

Looking ahead, the XAU/USD traders face a light economic calendar, particularly during the pre-Fed silence period of policymakers. However, the NY Empire State Manufacturing Index for June on Monday and US Retail Sales for the same month on Wednesday will be significant events to monitor for clearer market directions. Overall, risk-related catalysts will play a crucial role in determining the near-term trajectory of the gold price.

Gold found strong resistance at 1960 and formed a bearish pattern that may lead to a temporary correction toward the 1940. Gold is still bullish and may continue toward the next resistance of 1970 and followed by 1980. However, it appears that an initial correction is necessary.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1982	1970	1960	1931	1920	1904

On Monday, European shares experienced a decline due to the slump in luxury group Richemont, which reported weaker-than-expected organic sales growth. Moreover, concerns arose about the demand from China, the world's second-largest economy, as its economic growth showed lackluster performance.

The personal and household goods index (.SXQP), which includes luxury companies, suffered the most significant sectoral losses, declining by 2.2%.

Adding to the negative sentiment, data indicated that China's economy expanded at a fragile rate in the second quarter, primarily due to weakened demand. This development increases the pressure on policymakers to implement additional stimulus measures.

The DAX faces a significant challenge of surpassing the 16,400 level. In the short term, the DAX remains bullish due to the prevailing risk-on sentiment in the markets, but Q2 earnings are awaited to confirm whether or not there will be more momentum.

Resi Level 3	Resi Level 2	Resi Level 1	Suppo level 1	Suppo level 2	Suppo level 3
16800	16600	16370	15650	15400	15200

 

[Zforex]

Mixed Performance in Asia-Pacific Markets, Hong Kong Stocks Lead Losses, RBA Maintains Interest Rates, and China Evergrande Group Reports Steep Losses

The Asia-Pacific markets experienced a mixed performance, with Hong Kong stocks leading the region's losses, plummeting by 2%. This decline was primarily influenced by the real estate and technology sectors. Meanwhile, the Nikkei 225 saw a marginal increase, and the Topix rose by 0.32%. Japanese investors are preparing for significant economic data to be released later this week, including trade balance and consumer price index figures for June.

The meeting minutes reveal that the Reserve Bank of Australia (RBA) recently deliberated on whether to maintain or raise interest rates by 25 basis points during its July meeting. Ultimately, the central bank decided to keep the existing rates, citing the current monetary policy as already restrictive due to the prevailing cash rate of 4.1%. The RBA acknowledged the historically high level of mortgage interest payments in May and recognized a decline in inflation, which was expected to help mitigate the risk of medium-term inflation expectations rising. Furthermore, the RBA expressed concerns that increasing rates could lead to a more significant-than-expected slowdown in output growth, highlighting the substantial uncertainty surrounding household consumption.

China Evergrande Group, a Chinese property developer, reported substantial losses in its long-delayed results for 2021 and 2022. The company recorded a total net loss of 686.2 billion yuan ($95.68 billion) in 2021 and a 125.8 billion yuan total net loss in 202

On Wednesday, the U.K. inflation figures will be released as the Bank of England prepares for its upcoming monetary policy meeting on August 1. Following strong wage growth in the three months leading up to May, there remains a possibility of a consecutive 50 basis point hike.
Additionally, U.S. retail sales data is set to be released, and a strong performance indicated by the numbers could lead to a reassessment of whether the Federal Reserve has almost concluded its interest rate hikes.

 

[Zforex]

EURUSD

The Census Bureau is scheduled to release retail sales data in the United States (US) on Tuesday, July 18th. Economists anticipate that the headline Retail Sales figure for June will demonstrate another increase, building on the unexpected rise observed in May. It is worth noting that the Retail Sales data is adjusted for seasonality but does not account for inflation.

The US Retail Sales report has the potential to significantly impact the expectations for the Fed's interest rates, which, in turn, can affect the valuation of the US Dollar. This impact is particularly significant this week, as there is a lack of high-impact US economic data, and the Fed's 'blackout period' has commenced prior to the July 25-26 FOMC meeting.

Economists predict that auto sales will contribute to the overall increase in retail volume last month. Additionally, the rapid growth in sales at bars and restaurants is expected to bolster the headline retail sales figure. However, there is a downside risk posed by slowing fuel sales.

The EUR/USD is currently attempting to either correct or break out beyond the 1.1250 level in order to advance towards the next target of 1.1300.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1400	1.1300	1.1250	1.1200	1.1500	1.1000

Inflation has remained stubbornly high, boosting expectations of higher for longer UK rates. BOE has responded by maintaining its aggressive stance on interest rates, hiking by more than expected in June, taking rates to the highest level since 2008. The market is pricing rates rising above 6% from the current 5%.

Wednesday will see the release of U.K. inflation figures, as the Bank of England prepares for its latest monetary policy meeting on Aug. 1. A second consecutive 50 basis point hike remains a possibility after strong wage growth in the three months to May.

The GBP/USD is continuing the correction toward the 1.3000 support level. The correction is needed before continuing up if the Wednesday data came higher to help the pair reach the 1.3200 level.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3310	1.3200	1.3000	1.2650	1.2540	1.2460

The recent weakness in the risk-barometer pair reflects the cautious optimism prevailing in the markets as concerns over the US-China conflict diminish following Washington's efforts to rebuild relations through frequent visits to Beijing. Moreover, traders of the USD/JPY pair are influenced by mixed concerns regarding the future actions of global central banks, particularly with the impending possibility of a Fed rate hike in July.

It is important to highlight that policymakers at the Bank of Japan (BoJ) continue to advocate for maintaining the accommodative monetary policy, despite market expectations of an eventual shift away from ultra-low interest rates and a moderation of the Yield Curve Control (YCC) policy.

The performance of yields has a significant impact on the USD/JPY pair, and currently, with the ongoing selling of US yields, we are observing increasing pressure on the pair. Breaking the support level at 137.7 is crucial for further downward movement.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
142.00	141.20	140.22	139.00	138.00	136.00

Gold price (XAU/USD) is experiencing positive momentum as traders reevaluate their previous concerns regarding China, leading to a return of the risk-on mood. The weakness in the US Dollar, following unimpressive data and the inability to sustain Friday's recovery, further strengthens both market sentiment and the XAU/USD price. As a result, buyers of gold are preparing for a battle to reclaim the significant $2,000 level.

In addition to recent catalysts indicating China's capability to support economic growth, headlines suggesting improved US-China relations contribute to the market's cautious optimism. Meanwhile, despite the US NY Empire State Manufacturing Index falling short of expectations, which was in contrast to positive consumer-oriented figures from Friday, it failed to boost the US Dollar.

Furthermore, the anticipation of additional stimulus measures from China and the challenges faced by restrictive monetary policies also supports a more robust gold price.

Looking ahead, the upcoming US Retail Sales and Industrial Production data for June will play a crucial role in determining the trajectory of the Federal Reserve's rate hike beyond July and will offer insights into potential movements in the gold price.

Gold is currently hovering around the 1960 area, awaiting a clear direction. Yesterday, there was an attempt to retreat to the 1940 level, which ultimately failed. As yields continue to decline, gold is recovering and a potential breakout above the current resistance level in 1962 could pave the way towards the 1970 and 1980 levels.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1982	1970	1960	1931	1920	1904

European futures are showing little change this morning, following a decline in Asian stocks due to weak Chinese economic data and a lack of stimulus, which have dampened market sentiment. Investors are eagerly awaiting U.S. retail sales figures to gain insights into the Federal Reserve's policy outlook. It's worth noting that the Fed, European Central Bank, and Bank of Japan will conduct policy reviews next week.

Additionally, market participants are closely monitoring the upcoming quarterly results this week, particularly from major U.S. banks such as Bank of America, Morgan Stanley, and Goldman Sachs, as they provide valuable information about the financial sector. Tesla's earnings report later this week is also drawing attention.

The DAX came back toward the 16,200 level. In the short term, the DAX maintains a bullish stance due to the prevalent risk-on sentiment in the markets. However, confirmation of further momentum awaits Q2 earnings results.

Resi Level 3	Resi Level 2	Resi Level 1	Suppo level 1	Suppo level 2	Suppo level 3
16800	16600	16370	15650	15400	15200

 

[Zforex]

US retail sales in June 2023 rose 0.2% MoM, below expectations of a 0.5% increase. Despite elevated interest rates, consumer spending remains resilient.

 

[Zforex]

Slight Declines in S&P 500 and Nasdaq Futures, Strong Earnings Reports, Crude Oil Market Tightens, Bitcoin's Range-Bound Price Action

US INDICES:

S&P 500 futures and Nasdaq-100 futures experienced slight declines. Bank of America announced second-quarter earnings that surpassed expectations, attributed to higher interest rates. Additionally, Bank of N.Y. Mellon also exceeded earnings expectations, resulting in a more than 1% increase in its stock price. On the other hand, PNC Financial reported mixed second-quarter numbers, causing its stock to drop by over 2%.
J.B. Hunt is scheduled to release its earnings report later today. The ongoing earnings season has had a strong start, with approximately 82% of the reported S&P 500 companies surpassing profit estimates, according to FactSet.
As inflation data in recent times supports the notion of a soft-landing scenario for many investors, stocks have continued their rally this year. However, some skepticism remains.
The Nasdaq once again reached 15,720, nearing the resistance level around 15,800, aligning with the upper parallel of the current daily bullish channel. It has now entered the final phase of its climb towards the 16,800 level, last witnessed in November 2022.​

USOIL:

After the disruption caused by protests at Libyan oil fields, production has now resumed. However, the market is tightening due to reduced exports from Saudi Arabia and Russia, as reported by the bank. Russian crude shipments have dropped by 25% in the first four weeks of July, while Saudi Arabia has raised the official selling prices for its crude and cut production by 1 million b/d, resulting in a decline of 400,000 b/d in exports during the first half of the month.
The National Bank of Canada indicates a shifting sentiment in favor of crude oil, driven by expected draws in crude and petroleum product inventories, operational and political disruptions in Africa, and a clearer understanding of the impact and timing of production cuts. While the bank anticipates a relatively weaker second quarter, it acknowledges that this sentiment is already reflected in the consensus. Looking ahead to the second half of the year, the National Bank maintains a positive outlook and identifies opportunities for relative outperformance.
WTI crude oil reached a price level of 77.25, encountering resistance from the 200-day moving average (200MA) on the daily chart. Subsequently, there was a correction towards the support level of 74.00. It is important to note that the 74.00 level had previously served as resistance on multiple occasions in the past three months.​

BTC

While the stock market has been on an upward trend recently, with gains seen in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, the cryptocurrency market has experienced a lack of momentum, failing to keep up with the positive catalysts of late.
In June, Bitcoin witnessed a surge above $30,000 following new applications for spot Bitcoin exchange-traded funds and a favorable outcome in a significant court case involving Ripple and the Securities and Exchange Commission, which provided a boost to the market.
The U.S. Securities and Exchange Commission (SEC) has now officially recognized another proposal for a Bitcoin Exchange-Traded Fund (ETF), signaling a positive outlook for Bitcoin. Valkyrie's Bitcoin ETF is the latest proposal to gain acknowledgment, joining a series of recent applications. Notably, Valkyrie stands out as the only applicant in this round to have chosen a ticker symbol for their ETF: BRRR.
Currently, Bitcoin (BTC) is experiencing a range-bound price action formation, with the resistance level at 31,800 and the support level at 29,900. Traders are paying close attention to the weekly chart, specifically watching for a potential breakout above the 100-day moving average (100MA). A successful breakout above this level has the potential to drive the price toward the initial resistance at 36,000.​