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
- Alphabet Surges 6.5% on Impressive Earnings: Google’s parent company, Alphabet, exceeded expectations on both revenue and profit fronts. The company’s strong performance in digital advertising and cloud revenue delighted investors.
- Meta Posts Strong Revenue Growth: Despite an uncertain economy, Facebook’s parent company, Meta, showcased a positive forecast. Artificial Intelligence played a crucial role in boosting engagement and ad sales.
- Oil Reaches 3.5-Month High: Oil prices soared to nearly $80.00 per barrel, driven by supply concerns following production cuts by Saudi Arabia and Russia. Additionally, expectations of further stimulus in China added to the bullish sentiment.
- Dow Jones Registers Longest Winning Run Since 1987: The Dow Jones index notched 13 consecutive winning sessions, fueled by optimism that the Federal Reserve may be nearing the peak of its rate hikes.
- Musk Rebrands Twitter as “X”: Twitter underwent a rebranding under the leadership of Musk, changing its logo to an “X” and updating its homepage and mobile apps, eliciting mixed responses from users.
- Gold Continues to Rise: It is evident that gold’s upward trajectory continues as it achieves its fourth consecutive weekly gain. Speculation about the Federal Reserve’s aggressive rate-hiking cycle, which appears to be coming to an end, is blamed for this rise. As the Fed thinks about cutting interest rates in the future, falling treasury yields have a history of boosting gold prices and making the metal more attractive as a safe-haven asset. Even though there are worries about the US economy and the possibility of a recession, gold is still steady and unmoved. Its status as a safe-haven asset persists, attracting demand from investors seeking security during uncertain times. JP Morgan’s analysts predict continued gold growth. Their forecast suggests that gold prices could surpass $2000 by the end of this year and set new record highs by 2024, reinforcing the precious metal’s long-term bullish trend.
- The Fed raises interest rates to their highest level in 22 years. As expected, the Federal Open Market Committee (FOMC) raised the federal funds target rate by 25 basis points from 5.25% to 5.50%. This was the 11th rate hike in 16 months, raising rates to a 22-year high. Fed Chair Jerome Powell hinted at more hikes but stressed the need to consider economic factors, particularly inflation. Powell mentioned a cautious approach, asserting that there is still progress to be felt from the previous tightening. Notably, the FOMC no longer predicts a recession in 2023. Even though Powell was optimistic, he emphasized that the fight against inflation is far from over, leaving room for more rate changes.
Upcoming Events to Watch
- Bank of England (BoE) Rate Decision (Thu, 3rd August): Expectations of a 25 bps hike amid cooling inflation, market eyes BoE’s rate path signals.
- Reserve Bank of Australia (RBA) Rate Decision (Thu, 3rd August): Inflation cools to 6%, the labor market is tight; RBA meeting “live” with market leaning towards a pause.
- Apple Q3 Earnings (Thu, 3rd August): Anticipated 1.8% revenue decline to $81.5B; focus on iPhones and adjusted EPS performance.
- Amazon Q2 Earnings (Thu, 3rd August): Forecasts show a jump in profit and sales; Amazon Web Services contributes to growth.
- July Non-Farm Payroll Data (Fri, 4th August): Job creation slowdown observed; wage growth remains strong; market monitors recession fears.
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.
The EUR/USD pair remains in an upward trend, consistently forming higher highs and lows while trading above the 50 SMA. Last week presented challenges as both the ECB and FED made predicted interest rate adjustments, but the market’s response during the holiday period was unexpected. Anticipation builds for the upcoming week, with the Bank of England and the Reserve Bank of Australia scheduled to announce interest rate changes. Notably, the price has recently broken below the 1.11 level and underwent a retest from underneath, displaying a notable bearish engulfing candlestick on the daily chart (not closed yet). Immediate support levels lie at 1.10, with further support at 1.085.
The GBP/USD pair is currently in an uptrend, consistently forming higher lows and highs and trading above the 50 SMA. After bouncing back from the previous resistance, which now acts as support at 1.283, the price is showing signs of retracement following two consecutive up-days. The next support levels are seen at 1.273 and then 1.258. Overall, the bias remains higher, but a close below 1.258 could negate this upward trend. Traders should exercise caution due to the presence of high-impact news events scheduled for this week, which have the potential to significantly impact the currency pair.
XAU/USD is currently in an uptrend, showing higher highs and lows while trading above the 50 SMA. However, it faced resistance at the 1980 level and formed a lower high and lower low below the 50 SMA. To avoid a deeper pullback towards support around 1900, the SMA needs to hold firm. However, the positive outlook for gold is driven by expectations of a potential peak in U.S. interest rates. This trend has also contributed to the dollar (DXY) heading for its second consecutive monthly decline.
XUS500 is in an uptrend, consistently making higher highs and lows above the 50-day SMA. The index has been steadily rising, supported by the unbroken 1D MA50 since March 29. The recent rise suggests the potential for the price to reach the January 04, 2022 All-Time High (ATH) at 4820. The current price action shows a low volatility uptrend, with the price testing the 4600 level. Near-term support can be found around 4570, followed by 4510. To maintain the uptrend, it’s important for the price to stay above the last swing low at 4370, even if a larger correction is overdue.
Thank you for reading! Wishing you successful trades ahead!
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