Welcome to the Weekly Market Update!
In this edition, we bring you the latest highlights and insights from the world of finance. We will cover the week’s top stories, provide market analysis, highlight economic developments, discuss upcoming events to watch, and present technical analysis. Let’s delve into the key information you need to stay informed and make informed financial decisions.
Top Stories of the Week
- Russia & Saudi Arabia cut oil output: To support oil prices, Saudi Arabia extended its voluntary production cut of 1 million barrels per day (bpd) until August, while Russia announced a reduction of 500,000 bpd.
- Meta launched the “Threads” app: Meta, formerly known as Facebook, introduced a new text-based app called “Threads,” which aims to compete with Twitter and cater to users seeking alternatives due to recent changes made by Elon Musk.
- China restricts exports of chipmaking metals: Amid the escalating US-Sino tech war, China decided to restrict exports of crucial materials used in computer chip manufacturing, further intensifying the trade dispute.
- Netflix hit a 17-month high: Successful efforts to combat password sharing contributed to a surge in Netflix’s stock, leading Goldman Sachs to upgrade their rating from sell to neutral.
- BTC/USD hit a 13-month high: Following concerns raised by the US securities regulator, the Nasdaq refiled its application to list BlackRock’s Exchange-Traded Fund (ETF), resulting in a significant surge in BTC/USD to new highs.
Market Analysis
- Meta’s Share Price Surge: Meta’s share price has skyrocketed by over 135% year-to-date, reaching a peak not seen in 17 months. Investors have been particularly impressed by Meta’s focus on core businesses and their implementation of efficiency measures, including significant job cuts. Furthermore, Meta’s launch of Threads, leveraging its existing social network from Instagram, provides them with an immediate advantage over other companies attempting to create a Twitter-like platform.
Economic Highlights
- Euro Zone Business Activity Contracts in June, Adding to Economic Concerns: A recent survey revealed that business activity in the euro zone declined in June, with both the services industry and factory output experiencing a downturn. The Composite Purchasing Managers’ Index (PMI) dropped below the growth threshold of 50 for the first time since December, indicating a contraction. Manufacturing activity contracted faster than anticipated, and the services industry also saw a decline. Despite these challenges, there was a positive note as pricing pressures eased, which may have implications for the European Central Bank’s efforts to stimulate inflation.
Upcoming Events to Watch
- US CPI: The US Consumer Price Index (CPI) data will be released on Wednesday, 12th July.
- US Q2 banks earnings: Citigroup, Wells Fargo, and JP Morgan will release their quarterly earnings on Friday, July 14th.
- UK GDP & average earnings data: UK unemployment, wage growth, and GDP data on Tuesday, 11th July, and Thursday, 13th July, respectively, will inform the Bank of England’s rate decision in August.
- ECB minutes and EC growth forecasts: The June ECB meeting minutes and the European Commission’s growth forecasts will indicate future rate hikes and policymaker divisions on Thursday, July 13.
Technical Analysis
We have analyzed the most popular trading pairs and assets, including EUR/USD, GBP/USD, Gold, and US500. Our aim is to provide you with an insightful analysis of their trends and support/resistance levels, which will help you make informed decisions.
EUR/USD
The EUR/USD pair moves sideways without clear upward or downward movements but remains above the 50 SMA. On Friday, the pair broke its resistance zone and trend line, thanks to the release of Non-Farm Payrolls data and the weakening of the US Dollar Index. If we want to see the previous upward trend resume, it might require the price to drop below the 1.08 level. This could attract more optimistic buyers about the pair’s future performance.
GBP/USD
GBP/USD is in an uptrend above the 50 SMA, but a failure to surpass 1.275 followed by a drop under 1.26 could indicate a bearish shift. At present, the bias remains towards the continuation of the uptrend. However, if the price fails to break through the resistance at 1.275 and subsequently drops below the support level at 1.26, it would indicate a bearish signal. Wait for a pullback to key levels, as it presents an optimal entry point.
XAU/USD
Gold is in a downtrend below the 50 SMA. The successful retest of resistance-turned-support at 1930 implies further downside potential, with 1900 as current support. A break above 1930 would invalidate the bearish bias. Higher interest rates typically reduce the appeal of gold as an investment. The likelihood of the Federal Reserve raising interest rates later this month, influenced by a slowdown in the labor market, is expected to exert further bearish pressure on gold.
XUS500
US500 is in an uptrend above the 50 SMA. The presence of bearish RSI divergence, coupled with a possible fakeout above the previous high at 4430, warns of a potential larger correction or even a trend reversal.
Thank you for reading! Wishing you successful trades ahead!
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