24.06.24 - 28.06.24
Results of the previous week
| TSLA +7.92 | SUGAR +3.04% | NQ +1.32% |
NG -12.24% | VIX -4.16% | XAGUSD -1.47% |
Last week, stock indices were mostly up as they recovered from a correction. They received some support from the final Q1 GDP growth data that showed GDP was up 1.4%, well below the 3.4% reported for Q4 2023. The indicator's movements strengthened expectations that the Fed will still start its rate reduction cycle in 2024.
In the foreign exchange market, the dollar/yen pair hit a 34-year high. Most other major currency pairs showed mixed movements as they reacted to incoming macroeconomic data, which were contradictory. On the one hand, the US economy slowed. On the other hand, initial unemployment claims dropped. The British pound is showing uncertainty ahead of next week's election.
Brent crude oil prices are back above the $85 per barrel mark after a correction. The energy resource is supported by growing expectations that the Fed will soon cut its key rate. According to CME FedWatch, the probability of a rate cut starting in September rose to 64% from 50% a month earlier. Monetary policy easing is fuelling energy demand.
Key events of the current week
US Federal Reserve meeting minutes | DATE 03.07 | GMT | FORECAST | PREV. | IMPORTANCE |
According to the latest data, the US economy is beginning to show signs of cooling after all. GDP growth in Q1 slowed to 1.4% from 3.4% in the previous quarter. At the same time, the inflation rate still remains above the US Federal Reserve's target level. The high price pressure is forcing the Fed to delay the timing of the start of its rate cuts each time. At this stage, the regulator is considering just one rate cut before the end of the year. That's good news for the US dollar. After the US Fed confirms its chosen strategy, USD/JPY may test the recent high at 161.30. | |||||
The UK. General election | DATE 04.07 | GMT | FORECAST | PREV. | IMPORTANCE |
Ahead of the election, the UK economy is not in its best shape. The only thing offering some optimism at this stage is that inflation has fallen to the Bank of England's target level, which allows the British regulator to gradually transition to an easing of its monetary policy. At the same time, the country's government debt-to-GDP ratio is at a 63-year high. The new government will have to address this and a host of other problems. The Labour Party is clamouring for a restoration of economic growth. If it wins, which would represent a change in the ruling majority), it would be good news for the pound. In such a scenario, we could see the cable get back up to somewhere around 1,2740. | |||||
The US. Non-Farm Payrolls | DATE 05.07 | GMT | FORECAST | PREV. | IMPORTANCE |
The latest non-farm payrolls data were unexpectedly strong. The indicator significantly exceeded the data from the previous period and forecast values. In fact, it signalled that the sector was in good shape. A good labour market means domestic consumption is faring well, too, which is very important for the service-oriented US economy. However, global analysts forecast a slowdown in job creation in June. Coupled with slowing GDP growth, this is an unfavourable signal for the US dollar as signs of an economic cooldown bring a US Federal Reserve rate cut closer. Against this backdrop, EUR/USD may roll back to around 1.0800. | |||||
