Introduction to Market Trends
Last week, markets experienced significant volatility due to the release of weak employment data in North America. This led to increased expectations of rate cuts, which in turn affected currency values. The Canadian dollar underperformed slightly against the US dollar. Meanwhile, gold prices surged to a record high as investors sought safe-haven assets amidst a dovish shift in monetary policy.
North American Jobs Data and Its Impact
The weak labor market performance in both the US and Canada led to a reappraisal of rate cut expectations. Markets are now pricing in 47 basis points of Canadian easing and 131 basis points in the US over the next year. The probability of a rate cut at each of the remaining Fed meetings this year stands at 90%, with a slight chance of a deeper 50-basis-point cut in September.
Market Reaction to Economic Data
Gold benefited from the dovish shift, reaching a fresh record high. Equities showed mixed reactions, with initial rallies on hopes of cheaper borrowing costs, followed by concerns about a potential recession. Despite this, late-session bids provided support, and the main US indexes closed the week in positive territory.
Key Market Events to Watch
This week brings a mix of economic data, central bank policy, and political risk events that will shape global market direction. Key events include the ECB rate meeting, US CPI and PPI inflation data, Japan’s GDP, German industrial output, and the US University of Michigan Consumer Sentiment index.
Monday’s Mixed Data and Political Tensions
Monday will see the release of Japan’s GDP, German industrial output, and the Eurozone Sentix Index. Additionally, the French no-confidence vote will add to political tensions, potentially affecting French assets and broader EU stability.
Tuesday’s Diplomatic and Tech Spotlights
The UN General Assembly will be in focus, with attention on Iran and global geopolitical tensions. The Apple event will also impact tech stocks and supply-chain sentiment globally.
Wednesday’s Inflation Focus
The US Producer Price Index will provide an early read on inflation trends, offering clues about future consumer inflation.
Thursday’s Central Bank and US Inflation
The ECB policy announcement will be closely watched for any signal of rate path adjustments. The US Consumer Price Index will be the most critical data point of the week, with shelter and services inflation likely to dominate discussions.
Friday’s UK Growth and US Confidence
The UK GDP will provide insight into the British economy’s resilience amid persistent inflation and Bank of England policy tightening. The US University of Michigan Consumer Sentiment index will offer a forward-looking gauge of inflation expectations and household confidence.
Forex Signals Update
Last week, markets saw significant volatility, with gold soaring to $3,600. EUR/USD continued its upward move toward 1.17, while main indices closed higher. A total of 35 trading signals were opened, with 23 winning signals and 12 losing ones.
Gold’s Surge to $4,000
Gold continues to attract strong safe-haven flows, with prices surging above $3,570. Technical charts highlight the $3,600 level as the next major resistance, which is expected to be broken soon as the upside accelerates.
USD/JPY’s Jump
The USD/JPY saw sharp swings, with the dollar pushed above ¥150 due to US yield differentials and Japanese capital outflows. However, disappointing US jobs data triggered profit-taking, causing the USD/JPY to slide by four yen from its peak.
Cryptocurrency Update
Cryptocurrencies remained highly active, with Bitcoin climbing to fresh highs of $123,000 and $124,000. Ethereum surged toward $4,800, its highest since 2021, despite a dip last week. The coins found support at their respective SMAs, with retail enthusiasm and renewed institutional participation driving fresh upside momentum.
Conclusion
This week is expected to be highly volatile, with key economic events and political tensions driving market direction. The ECB rate meeting and US CPI and PPI inflation data will be closely watched, while political developments and inflation readings will dominate the narrative. Traders should prepare for a week of significant market movements, with gold and cryptocurrencies continuing to attract attention as safe-haven assets. As the market navigates these events, it’s crucial to stay informed and adapt to the changing landscape to make informed investment decisions.
