Weekly market analysis 7th October 2024

This week’s economic calendar features several important data releases that are likely to shape market sentiment. No significant data releases are scheduled for Monday giving traders time to prepare for the significant economic events taking place later in the week.

On Tuesday, the only significant event is the Australian Monetary Policy Meeting Minutes which is likely to provide us with further clues on rates policy of the Reserve Bank of Australia.

On Wednesday the Reserve Bank of New Zealand (RBNZ) will announce its Official Cash Rate decision. The previous rate was 5.25%, with analysts expecting a reduction to 4.75%, signalling a potential easing of monetary policy. The RBNZ Rate Statement will also be crucial for understanding the bank’s stance on inflation and growth moving forward.

Crude Oil Inventories in the US are due later on Wednesday. The previous figure showed a build of 3.9 million barrels, but no forecast is available this week. This could be overshadowed by Middle East tensions as markets expect Israel to strike Iran soon. Traders will monitor this release for insights into oil supply dynamics and demand trends. Later in the day is the release of the FOMC Meeting Minutes, offering details on the Federal Reserve’s inflation concerns and potential rate hikes. However, market focus is likely to shift towards last week’s USD safe-haven rally and better-than-expected earnings numbers (0.4% vs. 0.3% expected).

On Thursday we will see the release of key US inflation data. Core CPI m/m is expected to be 0.2%, slightly lower than the previous 0.3%, suggesting inflation pressures may be easing. However, the wages component could exceed expectations, as indicated by Friday’s data. This creates an element of surprise which could move the markets. CPI m/m is forecast to drop to 0.1% from 0.2%, and CPI y/y to slow to 2.3% from 2.5%. Unemployment claims are expected to rise slightly from 225K to 229K, indicating some softening in the labour market.

On Friday, the UK will release its GDP m/m data, forecasted to show modest growth of 0.2%, improving from 0.0% in the previous month. This would be a positive sign for the UK economy, indicating a recovery amid inflationary challenges. Canada’s Employment Change report is expected to show an increase of 33.1K jobs, up from 22.1K, while the Unemployment Rate is forecasted to rise to 6.7% from 6.6%, suggesting some weakening in the labour market.

Additionally, US Core PPI m/m and PPI m/m will be released. Core PPI is forecasted at 0.2%, down from 0.3% previously, while PPI is forecasted at 0.1%, down from 0.2% previously, reflecting a slight easing in producer price inflation.

The week closes with the Prelim University of Michigan Consumer Sentiment report, expected to increase from 70.1 to 70.5, pointing to improving consumer confidence. The Prelim University of Michigan Inflation Expectations report is forecasted to remain stable at 2.7%.

Here are 3 markets to watch this week

Gold

Gold has paused after trending higher over the past few weeks. During this consolidation, it has formed a lower swing high at 2673, some 12 dollars below the all-time high (ATH) of 2685. In the process, the market has created a triangle formation, which, if resolved in the direction of the trend, points to a measured move projection of 2714. Alternatively, if the market fails to attract buyers and breaks below the key confluence area of 2624–2634, it could trade down to the lower measured move projection of 2577. Note that the confluence area is formed by the 23.6% Fibonacci retracement level, the 50-day simple moving average (SMA), and a recent swing low at 2624, while the measured move projection on the downside (2577) coincides with the 50% Fibonacci retracement level.

GBPUSD

GBPUSD is trending higher on the daily chart and has corrected lower. The pair is now near critical levels, which could attract GBP bulls. The market is trading above the 50-period SMA and relatively close to a key market structure level (1.3044), which coincides with the 50% Fibonacci retracement level. At the same time, the Stochastic oscillator (5.3.3) is oversold. Therefore, from a technical perspective, the immediate downside might be limited. However, this needs to be confirmed by further price action. If buyers emerge, the pair could trade higher towards the recent high at 1.3434. Alternatively, if we see a decisive break below 1.3044, the market might move below the lower end of the bull channel (currently at 1.2907).

Dow Jones

The Dow Jones Industrial Average CFD (DJ) is trending higher within a bull channel. Recently, the DJ has moved sideways, forming another higher low and establishing support at 41,844. Just below this, another key support level lies at 41,604, which aligns with the 23.6% Fibonacci retracement level and may have encouraged bulls to buy above 41,844. If the bullish trend continues, a break above the latest all-time high (ATH) of 42,653 could follow. However, a move below 41,604 might see the market drop to the 38.2% Fibonacci level at 41,016.

This weeks high impact market events

The following economic events and data releases have the potential to cause considerable price movements, thereby offering you both opportunities and risks. Stay informed and leverage our economic calendar to access real-time data and analysis as these key events unfold.

Time (GMT +3)

Wednesday October 9th

Thursday October 10th

Friday October 11th

How will you trade the markets this week?

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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