Market sentiment continued to brighten last week as traders canceled bets on the Federal Reserve’s rate hike path. The benchmark S&P 500 index closed July with a gain of more than 9%, its best monthly performance since the end of 2020. Strong performance from Apple and Amazon helped US stocks on Friday, gaining 3.28% respectively and 10.36%.
The US dollar weakened across the board as traders turned to Treasuries, pushing yields lower, especially along the short end of the dollar-sensitive curve. Still, high inflation and a likely recession indicated stagflation in the economy, but that was not enough to deter risk-taking. The personal consumption expenditure (PCE) price index rose 4.8% year-on-year and US GDP growth fell 0.9% in the second quarter on a quarterly basis. Gold prices took advantage of the greenback’s weakness as traders pushed the XAU to its highest level since July 6 against the USD.
Still, sentiment is likely in a fragile position, and traders will be looking for a follow-up to confirm the uptrend seen in July. Meanwhile, weak economic indicators could continue to elicit a “bad news is good news” response from markets. The US ISM manufacturing PMI gauge for July is expected to cross the 52 mark this week, down from the previous 53 reading in June. Earnings reports for several other S&P 500 companies are expected to decline during the week.
The Australian dollar may continue to rise this week, but the Reserve Bank of Australia’s rate decision will be key to the direction of the Australian dollar. Many believe that the RBA has fallen behind in the fight against inflation, which could lead the central bank to play a game of catch-up. If so, this would likely help AUD/USD rise further. Analysts are expecting a 50 basis point rate hike from the RBA on Tuesday.
Elsewhere, New Zealand’s second-quarter jobs report is due out. The unemployment rate in the second quarter is expected to fall to 3.1%, according to a Bloomberg survey. NZD/USD rose more than 0.5% last week. The British pound is also expected to see a potential move following the Bank of England’s rate decision. A 25 basis point hike is expected from the BoE. GBP/USD recorded a strong gain of almost 1.5% last week. The Canadian jobs report in July and the US Nonfarm Payrolls report will close out the week, with the NFP numbers another potentially high-impact event that could see wagers on higher yields. the Fed change.
WEEKLY PERFORMANCE IN US DOLLAR VS. CURRENCIES AND GOLD
Aussie Dollar Outlook: US Dollar Swings Dominate AUD
The Australian dollar surged throughout the week, with CPI high but below expectations before the Fed and US GDP decimated the US dollar, pushing AUD/USD higher.
British Pound Forecast (GBP/USD) – Will the BoE be strong this Thursday?
At the last BoE meeting, the central bank raised interest rates by 25 basis points, although three MPC members demanded more. What size hike will the central bank decide on this Thursday?
Crypto Week Ahead: BTC, ETH Bull Run Resumes After FOMC Meeting, BTC Hits 6-Week High
BTC and ETH are increasingly attacking higher resistance levels. BTC gains in July could exceed 20%.
S&P 500, FTSE 100 Week Ahead: decision on NFP, ISM and BoE rates
The S&P 500 records its best month since November 2020. The FTSE 100 exceeds 100 and 200DMA
USD/CAD forecast: US and Canadian employment reports at a glance
Further data prints from the US and Canada could influence the near-term outlook for USD/CAD amid the ongoing monetary policy shift.
Gold price outlook turns bullish as July FOMC meeting marks peak of Fed ferocity
Gold prices could continue to rally in the near term as weakening US economic data could prompt a pivot in Fed monetary policy later this year, a scenario that could weigh on Treasury yields.
Euro Week Ahead: Focus on non-agricultural payroll. Will the job market compensate for the economic slowdown?
The euro appreciated slightly while the US dollar weakened. The contraction in US GDP again put the spotlight on a Federal Reserve pivot. Are the markets wrong? All eyes are on the nonfarm payroll data.
US Dollar Technical Forecast: DXY, USD/JPY, GBP/USD Charts to Watch
The US dollar has seen general weakness over the past week. The DXY Index, GBP/USD and USD/JPY are at key levels that could break or hold in the week ahead.
S&P 500, Nasdaq 100, Dow Jones Predictions for the week ahead
It was a big week for stocks as the Fed hiked rates another 75 basis points, helped by earnings reports from Apple and Amazon. Is the downtrend over?
Crude Oil Price Technical Forecast: WTI Rebound Rebounds in August
Crude oil jumped more than 12% from July lows with a rebound in technical support in sight in August. The levels that matter on the WTI weekly chart.
Gold Price and Silver Predictions – XAU, XAG Could Test the Rally
Gold and silver have seen strong rebounds, but their strength may be tested as another week unfolds; levels and lines to watch.
Dollar Yen Forecast: USD/JPY Extends Losses After Sharp Rise
USD/JPY continued lower after the bulls ran out of steam in mid-July. Is this a pullback or can the bears take control of the trend?