Headlines:

• Powell speech the main event to watch to start the week
• Treasury yields jump higher to start the week after Trump assassination attempt
• Eurozone May industrial production -0.6% vs -1.0% m/m expected
• Switzerland June producer and import prices 0.0% vs -0.3% m/m prior
• SNB total sight deposits w.e. 12 July CHF 458.9 bn vs CHF 453.4 bn prior
• Firms lower China 2024 growth forecast after softer data earlier

Markets:

• NZD lags on the day
• European equities lower; S&P 500 futures up 0.5%
• US 10-year yields up 3.9 bps to 4.225%
• Gold up 0.3% to $2,418.40
• WTI crude down 0.1% to $82.10
• Bitcoin up 2.7% to $62,460

The main story to start the week came over the weekend, that being the assassination attempt on former president Trump. The incident rebuffed the narrative of Trump winning his re-election bid and the betting odds translated somewhat to markets as well.

The dollar opened with a minor gap higher but saw that advance fade in European morning trade. Meanwhile, Treasury yields opened higher as well but are being kept in check during the session.

USD/JPY traded to a high of 158.43 in Asia but is now settling closer to 158.00 with large option expiries seen at the figure level. Likewise, EUR/USD also has large expiries pulling the pair close to 1.0900 after its opening gap lower near 1.0885.

There wasn’t too much significant action in major currencies, with the dollar still looking shaky after last week’s losses.

Elsewhere, European stocks are weighed lower as the EU is to meet to discuss fiscal plans. US futures gradually nudged higher though, continuing the good form in the last two weeks. S&P 500 futures are up 0.5% on the day with more bank earnings slipping in.

Coming up later, Fed chair Powell will be making an appearance so that will offer something for traders to be wary about to start the week.

This article was written by Justin Low at www.forexlive.com.

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Unfortunately, I reckon we might get a repeat performance to his comments last week in Congress. Sure, there was the US CPI report in between that and now. But I don’t think Powell will choose to rock the boat again today. It will be too early to be that confident on the inflation outlook, or at least to not be explicit about it.

He might acknowledge last week’s report as being one in the right direction but the overall progress remains gradual. There’s still time before committing to a move in September, so there is little to gain by preempting that at this point in time.

Once again, it’ll likely be a case of what Powell doesn’t say is what might matter more for markets.

September is pretty much fully priced in now while traders are seeing some ~63 bps of rate cuts for the year.

He will be due to speak in an interview later at the Economic Club of Washington D.C. at 1600 GMT with the event to carry on until 1730 GMT.

This article was written by Justin Low at www.forexlive.com.

Fundamental
Overview

The USD weakened across the
board last week following another soft US CPI report and benign Jobless Claims figures. The market not only fully
priced in a rate cut in September but also started to price in some chances of
a back-to-back rate cut in November.

Overall, we had a
goldilocks data release with an economy that is slowing but still growing. This
should support the soft-landing narrative and be positive for the risk
sentiment.

The NZD, on the other hand,
keeps on being supported against the US Dollar mainly because of the risk-on
sentiment as the US data continues to support at least two rate cuts from the
Fed without sending recessionary signals.

On the monetary policy
front, the RBNZ policy decision weighed on the Kiwi last week as
the central bank changed slightly its language to a more dovish leaning which
increased the odds of a rate cut at the next meeting as the market is now
assigning a 53% probability for such a move.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD couldn’t extend the gains following the bounce on the strong support zone around the 0.6050 level last week as the
surprisingly dovish RBNZ decision weighed on the Kiwi. If the price falls back
to the support zone, we can expect the buyers to step in again, while the
sellers will want to see the price breaking lower to increase the bearish bets
into new lows.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a range now between the 0.6150 resistance and the 0.6050
support. There’s not much to do here and the market participants will likely
keep on “playing the range” until we get a breakout on either side.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the recent catalysts that eventually led to a rangebound price action. This
week we don’t have much on the calendar but the New Zealand Q2 CPI report on
Wednesday will be something to watch as a soft report might increase the odds
of an August rate cut. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have Fed Chair Powell speaking at the Economic Club of Washington,
D.C. Tomorrow, we get the US Retail Sales report. On Wednesday, we have the New
Zealand Q2 CPI and Fed’s Waller speaking. On Thursday, we conclude with the
latest US Jobless Claims figures.

This article was written by Giuseppe Dellamotta at www.forexlive.com.