Weekly Market Analysis 29th July 2024

There are a lot of high impact data releases scheduled this week, including the NFP. Traders should be prepared for increases in market volatility, the trading opportunities this presents and the risks ahead.

On Tuesday, the spotlight will be on the US with CB Consumer Confidence and JOLTS Job Openings reports due. Analysts expect the consumer confidence index to slightly decrease to 99.8 from 100.4, while job openings are projected to be at 8.14 million. Any deviations from these forecasts could trigger volatility in USD pairs.

Wednesday will kick off early with Australian CPI data. Both the quarter-on-quarter and year-on-year figures are anticipated to remain steady at 1.0% and 3.8% respectively. Additionally, China's Manufacturing PMI is expected to show a slight decline to 49.3 from 49.5, potentially influencing AUD and CNY movements.

Japan will take centre stage with the Bank of Japan’s (BOJ) policy announcements. The BOJ Policy Rate is expected to remain unchanged at below 0.10%. Traders will closely watch the Monetary Policy Statement and the subsequent press conference for insights into future policy directions, which could impact JPY pairs.

Later on Wednesday, the Eurozone will release its Core CPI and CPI Flash Estimate data. The Core CPI is forecasted to dip to 2.8% from 2.9%, while the CPI Flash Estimate is expected to decrease to 2.4% from 2.5%. These inflation figures will be pivotal in shaping expectations for future ECB policy moves.

In the afternoon, the US will release several key reports including the ADP Non-Farm Employment Change, Employment Cost Index, and Pending Home Sales. Notably, the Federal Reserve will announce its Federal Funds Rate, which is expected to remain at 5.50%. The subsequent FOMC Statement and Press Conference will be critical for gauging the Fed's future monetary stance.

Thursday’s focus shifts to the UK with the Monetary Policy Summary and MPC Official Bank Rate Votes. The Bank Rate is expected to be cut to 5.00% from 5.25%. The outcome of the votes will be crucial for GBP traders, especially with BOE Governor Bailey’s speech later in the day.

The US will release Unemployment Claims and ISM Manufacturing PMI data. Initial claims are expected to increase slightly to 239K from 235K, and the ISM PMI is forecasted to rise to 49.0 from 48.5. These figures will provide insights into the health of the US labour market and manufacturing sector.

Friday concludes the week with Swiss CPI data, anticipated to show a decline of 0.2% month-on-month. In the US, key employment data including Average Hourly Earnings, Non-Farm Employment Change, and the Unemployment Rate will be released. The Non-Farm Employment Change is expected to show an increase of 177K, down from 206K, while the unemployment rate is forecasted to remain steady at 4.1%.

Three Markets to Watch This Week

Dow Jones Industrial Average

After retracing to a weekly support level formed by the previous all-time high, the market broke out of a bearish trend channel, closing above Thursday's high. The bullish close for the week suggests that large institutions are reallocating funds from highly valued Nasdaq stocks to Dow constituents.

With both the 20 and 50-period moving averages pointing upwards, the Dow remains bullish above Thursday's high of 40,457. Key support levels to monitor are 40,523 (aligning with the 38.2% Fibonacci retracement level) and 40,457 (Thursday's high, close to the 50% retracement level). Above these support levels, anticipate a move to 41,065 and potentially to 41,250 on extension. Conversely, if the Dow fails to attract buyers and falls below 40,457, a move to 40,280 is likely.

EURUSD

EURUSD is trending lower on the 2-hour timeframe chart. The market failed to rally to the nearest key resistance level at 1.0873, indicating a lack of demand. If the nearest support level at 1.0825 breaks, the market could trade down to 1.0805, closely aligned with the 50% Fibonacci retracement level. Should the dollar remain strong, EURUSD might trade down to the 61.8% retracement level at 1.0775. Alternatively, if the market rises above the 1.0873 resistance level, it could move to 1.0894. Note that the CPI release on Wednesday could significantly impact the market, depending on whether the data meets analyst expectations (headline: 2.4% y/y, core: 2.8% y/y) or not.

USDCHF

USDCHF has bounced higher from the bear channel low and is currently trading close to a key resistance level at 0.8860. The rally has occurred within a bearish context, with the market trending lower in a descending trend channel. If USDCHF rallies beyond 0.8860, it could move higher to the 0.8890 - 0.8910 range. This range is formed by the 50% retracement level at 0.8890 and the top of the bearish trend channel is at 0.8907, near the 50-period SMA. Alternatively, if the market fails to surpass 0.8860, USDCHF might decline to 0.8810.

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)

Tuesday July 30th

Wednesday July 31st

Thursday August 1st

Friday August 2nd

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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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