Weekly Market Analysis 22nd July 2024

This week promises a flurry of activity for traders, with numerous pivotal economic events and data releases on the agenda. Market volatility is likely to spike, presenting trading opportunities for those who are alert.

On Tuesday the US will release the Existing Home Sales data, which measures the annualised number of residential buildings sold during the previous month. It is forecasted to come in at 3.99 million, slightly down from the previous 4.11 million. A higher-than-expected figure could signal strength in the housing sector, potentially supporting the USD, while a lower-than-expected number might indicate a slowdown, exerting downward pressure on the currency.

Simultaneously, the Richmond Manufacturing Index will be released. This index reflects manufacturing conditions in the Fifth Federal Reserve District. The forecast stands at -7, an improvement from the previous -10. This index provides insights into the manufacturing sector's health, which is a vital component of the broader economy.

The spotlight will be on the Eurozone and the UK with several PMI data releases on Wednesday. Starting with France, the French Flash Manufacturing PMI is anticipated to come in at 45.7, a slight increase from the previous 45.4. Simultaneously, the French Flash Services PMI is expected to hold steady at 49.7. Germany's Flash Manufacturing PMI is forecasted to be 44.1, down from 43.5, while the Flash Services PMI is projected to remain unchanged at 53.3. These figures will provide insight into the economic health of the Eurozone and could influence EUR movements.

Later in the day, the UK will release its Flash Manufacturing PMI, expected at 51.1, up from 50.9, and the Flash Services PMI, forecasted to rise slightly to 52.5 from 52.1. These data points will be crucial for assessing the UK’s economic activity and could impact GBP pairs.

The afternoon will see significant events from Canada. The Bank of Canada (BOC) will release its Monetary Policy Report and Rate Statement, with the overnight rate expected to remain at 4.50%. These announcements will be pivotal for CAD traders, followed by the BOC Press Conference where further insights into the BOC’s monetary policy outlook will be provided.

In the US, the Flash Manufacturing PMI is anticipated to remain at 51.6, and the Flash Services PMI is expected to decrease slightly to 54.5 from 55.3. These releases will be key indicators of the US economic performance and could influence USD pairs.

On Thursday, the US will take centre stage with the Advance GDP q/q data due, forecasted at 1.9%, down from the previous 1.4%. This will be followed by the Unemployment Claims figures, expected to come in at 239K, slightly down from 243K. These data points will be significant for assessing economic growth and labour market conditions in the US, providing potential trading opportunities in USD pairs.

The week will conclude with the Core PCE Price Index m/m data from the US, expected at 0.2%, up from the previous 0.1%. This release is a key inflation indicator that the Federal Reserve closely monitors and could influence future monetary policy decisions.

Here are 3 markets to watch this week

GOLD

Last week, gold's attempt to maintain all-time high levels faltered, and prices fell below the previous record high of 2,450. A bearish rejection candle was created in the process, which suggests potential further weakness if prices drop below last week's low of 2,391. If there is a decisive break below the 2,391 level, gold might decline further with short sellers possibly targeting levels of 2,360 and, subsequently, 2,340. Conversely, should the 2,391 support level hold firm, there may be a rebound towards the 50% retracement level at 2,438.

SILVER

Silver has formed a lower reactionary high of 31.75 on the weekly chart, which has resulted in a triangle formation above 28.56. This pattern suggests institutional selling pressure that could lead to further declines in XAGUSD. If the key support level at 28.56 is breached with sustained selling pressure, the market might descend to 27.60 and potentially extend to 26.20. Note that the measured move price projection based on the width of the triangle formation indicates a target of 25.16. Conversely, if there is decisive buying around 28.56, we might see an attempt to reach the 30.40 level.

DAX

DAX also faced selling pressure last week. This resulted in a lower reactionary high in the weekly chart. With the last week's close below the prior week's low there is an increased probability that there could be more weakness ahead with sellers possibly thwarting the rallies this week. If this scenario plays out the market could trade down to 17,950. Note, however, that in the daily chart the market is oversold in terms of Stochastics (5.3.3). This could lead to a reaction higher especially if the market can hold above 18,300. This could result in DAX testing the 18,400 – 18,430 range.

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 23rd

Wednesday July 24th

Thursday July 25th

Friday July 26th

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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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