Fundamental
Overview

The S&P 500 has been on a steady decline since the last US CPI report
on July 11th. In the first stages of the pullback, we’ve been seeing
a rotation from big cap stocks into small cap stocks as the Russell 2000
displayed an opposite price action. Eventually, the bearish momentum picked up
and we saw a more aggressive decline with the index falling by 5%.

A good argument
has been that most of the moves we’ve been seeing were driven by deleveraging
from strengthening Yen. Basically, the squeeze on the carry trades
impacted all the other markets. Given the magnitude of the recent appreciation
in the Yen and the correlation with many other markets, it looks like this
could have been the reason indeed.

It will be interesting to
see how things evolve in the next days and if this correlation finally fades
now that the BoJ decision is in the rear-view mirror. It’s already a good sign that despite some more yen strengthening this morning, the stock market held the gains. From a
big picture perspective, nothing has changed as the market continues to expect
at least two rate cuts by the end of the year and sees some chances of a
back-to-back cut in November.

Today, we will also have
the FOMC rate decision where the Fed is expected to keep rates steady and
signal a rate cut in September. Overall, this should continue to support the
soft-landing narrative and be positive for the general risk sentiment as the
Fed is going to cut rates into resilient growth.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 seems to be bottoming out at the major trendline around the 5435 level where we had
also the 38.2% Fibonacci retracement level for confluence. The buyers stepped with a defined
risk below the recent lows to position for a rally into a new all-time high.
The sellers will need the price to break below the trendline and the 5430 level
to increase the bearish bets into new lows.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a strong resistance zone around the 5540 level where we
can find the confluence of the previous swing low, the downward trendline and
the 50% Fibonacci retracement level. This is where we can expect the sellers to
step in with a defined risk above the resistance to position for a drop into
new lows. The buyers, on the other hand, will want to see the price breaking
higher to invalidate the bearish setup and increase the bullish bets into a new
all-time high.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we’ve been consolidating between the 5440 support and the 5540
resistance. The market participants might keep on playing the range for now,
but a breakout on either side should lead to a strong and sustained move. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US ADP, the US Employment Cost Index and the FOMC Policy
Decision. Tomorrow, we get the latest US Jobless Claims figures and the US ISM
Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP
report.

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

This week is essential not only because
of the central bank meetings (from the US, UK, and Japan) but also because of
the quarterly earnings reports of the major technology companies.

Results from Apple, Amazon, and Microsoft
will be released, and there is always room for surprise. Investors expect these
reports to exceed revenue and earnings expectations.

Another critical factor to watch is the
performance of massive investments in artificial intelligence
technologies. Are these investments paying off or doing as poorly as Alphabet?

If companies show strong results but
provide poor guidance at the same time, it can negatively impact the market,
pushing the Nasdaq and S&P 500 further down and further
reorienting towards small caps.

What does the market expect, and which
companies should beat it?

For Microsoft, earnings per share are
expected to be $2.94 on revenue of $64.5 billion, up from $2.69 on revenue of
$56.2 billion for the same period last year.

Cloud revenue is expected to reach $36.8
billion, and revenue from the intelligent cloud, which includes Azure, is
expected to reach $28.7 billion. Of course, investors should be eager to see
how AI performs.

Finally, it is essential to see how much
more the company plans to invest in technology. If Capex exceeds expectations
in areas that do not yet generate significant revenue, this could worry
investors.

Given their substantial investments, Meta
Platforms and Amazon (NASDAQ:AMZN) will face similar
scrutiny. Investors will seek evidence that AI is making a real difference to
revenues.

Apple recently revealed that it is
delaying the rollout of AI capabilities until October 2024. The critical
question is how they will explain this in their upcoming reports.

What to expect next?

Buying stocks before earnings reports is
always risky, whether they are tech giants or smaller companies, especially if
you don’t have inside information.

If all the major tech companies report
disappointing results, the correction of the major indices could continue.
However, for a significant turnaround to occur, something more substantial
would be needed.

For example, if Fed Chairman Jerome
Powell indicates that inflation progress is slowing and rate cuts could be delayed, this could affect
the market. However, this scenario is quite unlikely.

On the other hand, if the rest of the
“Magnificent Seven” do not disappoint, it could boost not only the Nasdaq but
the market as a whole, potentially increasing the overall appetite for risk.

This article was written by FL Contributors at www.forexlive.com.

• US futures keep the calm so far on the day
• Euro stays little changed after flurry of data
• Eurozone July final consumer confidence -13.0 vs -13.0 prelim
• Eurozone Q2 preliminary GDP 0.3% vs. 0.2% Q/Q expected
• Italy Q2 preliminary GDP 0.2% vs 0.2% Q/Q expected
• Germany Q2 preliminary GDP -0.1% vs. 0.1% Q/Q expected
• Bavaria July CPI +2.5% vs +2.7% y/y prior
• What are the main events for today?
• European equities mostly a touch higher to start the day
• Switzerland July KOF leading indicator index 101.0 vs 102.4 expected
• Spain July preliminary CPI +2.8% vs +3.0% y/y expected
• Spain Q2 preliminary GDP 0.8% vs 0.5% Q/Q expected
• USD/JPY claws its way back up above the 155.00 mark
• Earnings maketh the market
• Eurostoxx futures +0.2% in early European trading
• China’s Politburo holds meeting to set out economic priorities for H2 2024
• France Q2 preliminary GDP +0.3% vs +0.2% q/q expected
• USD/JPY creeps a little higher on the day
• FX keeps the calm ahead of busy calendar day in Europe

The
European session was relatively calm. The Eurozone Flash Q2 GDP showed a pickup in the
second quarter, which is something we already knew from the PMIs, while the
German economy continues to be the “sick man of Europe” as GDP disappointed
showing a contraction.

We also got
some CPI readings from Spain and Germany which showed further easing in
inflation with the focus now switching to the Eurozone Flash CPI being released
tomorrow. The market is seeing 50 bps of easing by year-end with a 63%
probability of a rate cut in September.

The notable
mover has been the JPY as it continues to drift lower heading into the BoJ
decision tomorrow. We got a breakout of a key trendline in USD/JPY today which
might have increased the bullish momentum but overall, it seems like there’s
some general squaring of positions into the risk event.

Looking
elsewhere, we are basically flat across all the other markets. The US Dollar,
equities, bonds and gold are slightly positive, while crude oil and bitcoin are
slightly negative on the day.

The focus will now switch to the US data with Job Openings and Consumer Confidence being released at 14:00 GMT/10:00 ET.

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

They were down roughly 0.3% earlier in Asia trading but have kept largely steady in European morning trade thus far. Both Nasdaq futures and Dow futures are also up 0.1%, reflecting a more tentative mood overall I would say. There will be a couple of modest earnings releases coming up but all eyes will be on Microsoft after the close: Earnings maketh the market

Besides that, investors will have to continue the waiting game ahead of the BOJ and Fed meetings tomorrow. Don’t forget that it is also NFP week, so the relevant figures from the US are also on the radar this week.

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

Fundamental
Overview

The USD has been rallying
steadily against most major currencies in the recent couple of weeks, although the
catalyst behind the move has been unclear. A good argument has been that most
of the moves we’ve been seeing in the past 10 trading days were driven by
deleveraging from strengthening Yen.

Basically, the squeeze on
the carry trades impacted all the other markets. Given the magnitude of the
recent appreciation in the Yen and the correlation with many other markets, it
looks like this could be the reason indeed.

From the monetary policy
perspective, nothing has changed as the market continues to expect at least two
rate cuts by the end of the year and sees some chances of a back-to-back cut in
November.

The data continues to
suggest that the US economy remains resilient with inflation slowly falling
back to target. Overall, this should continue to support the soft-landing
narrative and be positive for the general risk sentiment.

The CAD, on the other hand,
has been supported against the US Dollar in the past months mainly because of
the risk-on sentiment, although the recent events with the Yen boosted the US
Dollar against many major currencies. On the monetary policy front, the BoC
cut rates by 25 bps to 4.50% as expected last week signalling more to come
if inflation were to keep falling.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD eventually managed to break above the 1.3785 resistance zone and extended the rally into
the key 1.3860 level. This is where we can expect the sellers to step in with a
defined risk above the level to position for a drop back into the 1.36 support.
The buyers, on the other hand, will want to see the price breaking above the
resistance to increase the bullish bets into the 1.40 handle next.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a trendline defining the bullish momentum. The
buyers will likely keep on leaning on the trendline to target a break above the
resistance. The sellers, on the other hand, will want to see the price breaking
below the trendline to increase the bearish bets into the 1.36 support.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that if the price were to fall below the trendline, the buyers will have
another opportunity to step in around the previous resistance
now turned support at 1.3785. A further break below that support will
likely see the bearish momentum increasing with the sellers piling in for a
drop into the 1.36 support. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Job Openings and the US Consumer Confidence reports. Tomorrow,
we have the BoJ Policy Decision, the Canadian GDP, the US Employment Cost Index
and the FOMC Policy Decision. On Thursday, we get the latest US Jobless Claims
figures, the Canadian Manufacturing PMI and the US ISM Manufacturing PMI.
Finally, on Friday, we conclude the week with the US NFP report.

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

The tight range speaks to the lack of appetite among most dollar pairs so far today. The only exception once again is really USD/JPY, with the pair up 0.5% to 154.70 but off earlier highs as the 155.00 mark holds. As an aside, there are large expiries there in play so do be wary of that. Going back to EUR/USD, there’s little to work with despite the flurry of data in European morning trade.

The Q2 GDP data across the euro area reaffirms more resilience in the last quarter. But there are already early signs that the economy is beginning to stutter again as we get into Q3. Meanwhile, the Spanish and German state CPI readings aren’t really offering anything new to the picture thus far.

The disinflation process is still taking hold but at a very gradual pace. In fact, the bumps along the way are still very much persisting. In Germany, it looks like headline annual inflation might tick a little higher in July. But we’ll see on the core reading later, as that will be the bigger focus.

So far, the odds of an ECB rate cut in September are at ~65% and that is little changed from the ~68% before the session began. The ECB would definitely like more progress on inflation developments but they’re being made to wait. It looks like the August reading will be the more crucial one in determining whether the platform is right to act in September.

As such, that’s not leaving the euro with much to act upon today. EUR/USD is still holding just above its 200-day moving average (blue line) at 1.0821 with the 100-day moving average (red line) not too far away at 1.0795. That alongside bids layered at 1.0800 and the 50.0 Fib retracement level of the swing higher in July at 1.0807 will act as a key supportive region for the pair now.

But a firm break below that could set off more protracted losses for EUR/USD. If so, sellers will at least be looking to aim towards the June lows near 1.0666-70.

Do be mindful that the dollar side of the equation is also one to watch this week. That considering we have the Fed and the US jobs report coming up. Besides that, the overall risk mood is also an important factor as well amid key earnings releases for equities.

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

• Prior -14.0
• Economic confidence 95.8 vs 95.4 expected
• Prior 95.9
• Industrial confidence -10.5 vs -10.7 expected
• Prior -10.1; revised to -10.2
• Services confidence 4.8 vs 5.5 expected
• Prior 6.5; revised to 6.2

Of note, the employment expectations indicator dipped below its long-term average of 100 for the first time since April 2021. That suggests some softness to the labour market outlook moving forward.

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

Headlines:

• Dollar on steadier footing to kick start what will be a big week for markets
• Japanese yen stays in the spotlight with the BOJ coming up later this week
• USD/JPY Technical Analysis – The pair bounced on the key 152.00 support
• UK June mortgage approvals 59.98k vs 60.40k expected
• UK July CBI retailing reported sales -43 vs -24 prior
• Japan top council urges government, BOJ to be mindful of weak yen when guiding policy

Markets:

• USD leads, GBP and NZD lag on the day
• European equities mostly higher; S&P 500 futures up 0.4%
• US 10-year yields down 4 bps to 4.158%
• Gold up 0.1% to $2,388.23
• WTI crude down 0.6% to $75.52
• Bitcoin up 3.2% to $69,629

It was mostly a quiet session as markets are gearing up for a big week ahead.

The dollar is keeping on steadier footing, seen slightly higher across the board. USD/JPY was swingy in Asia but steadied mostly in European morning trade, hugging around 153.70-90 levels.

Besides that, the greenback posted a slight advance with GBP/USD falling to 1.2805 before keeping around 1.2820-30 levels now – down 0.4% on the day. EUR/USD is also softer, down 0.3% to 1.0820 while commodity currencies are marginally lower as equities are in a better mood today.

US futures are up but it’s early in the week to say anything about it, that especially with big earnings reports coming up. Four of the Magnificent Seven will be reporting and that will be one to watch for broader market sentiment, alongside the BOJ, Fed, and BOE meetings.

Elsewhere, Treasury yields are down on the day and that’s making for a bit of a mixed start to the new week with gold just marginally higher while oil is down despite Middle East tensions.

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

The decision is likely to be a finely balanced one though, with expectations of the bank rate vote being 6-3 or 5-4 in favour of a rate cut. But what are traders pricing in for the decision currently? The OIS market shows that there is a ~61% probability priced in, with roughly 55 bps of rate cuts for the year.

After the August decision, the BOE still has three meetings left for the remainder of 2024. That being in September, November, and December. So, there is still time to fit in the supposed two rate cuts priced in by traders at the moment.

Taking that into consideration, it might not matter too much if the BOE cuts this week or in September. That especially if they do send a more dovish signal at the meeting on Thursday. And even more so if the votes look to be close and the language is leaning towards moving to a rate cut at the next meeting.

Of course, the kneejerk reaction is to see the pound jump if the decision is to keep the bank rate on hold this week. But there is a strong likelihood to see that reaction quickly faded as well, unless the BOE sends a message that they are still very much uncomfortable with price pressures at present.

Just take note that the previous decision in June saw the central bank comment that the decision was already „finely balanced“, even if it was a 7-2 vote in favour of keeping the bank rate unchanged. Besides that, there was no easing language put in as the statement consisted of:

• Need to be sure inflation will stay low before cutting rates
• Monetary policy will need to remain restrictive for sufficiently long to return inflation to target
• BOE remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably
• Will continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole

So, any changes to that will help to rebuff the two rate cuts priced in for the months ahead even if there is no rate cut in August. In other words, the details is the thing to look out for with the decision this week.

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

Fundamental
Overview

Bitcoin eventually managed
to break above the key 67275 resistance as the risk mood improved in the latter
part of last week. From a macro perspective, nothing has changed as the Fed is
going to cut into resilient growth, which should ultimately be a strong bullish
driver for the market.

Over the weekend, Trump delivered
some positive remarks on Bitcoin as he continues to double down on his
support for the crypto industry. As a reminder, Bitcoin rallied strongly from
the lows after the failed attempt to assassinate Trump. The market reacted positively to the event because his odds of winning the election
soared.

Moreover, the two main
bearish drivers that we had at the beginning of the month have been gone as the German
government finally offloaded all of its Bitcoin holdings on July 12th
and the old crypto exchange Mt. Gox has been repaying its old clients since the
first week of July.

Bitcoin
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that Bitcoin eventually managed to break above the key 67.275 resistance. The buyers should now have even
more confidence to pile in for a new all-time high. The sellers, on the other
hand, will want to see the price falling back below the 67.275 level to regain
some control and start targeting a drop into the 64000 level.

Bitcoin Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the recent breakout of the 67275 resistance and then the retest
before a rally into a new high. From a risk management perspective, the buyers would
have a better risk to reward setup around the trendline
and the 67275 level to position for a new all-time high. The sellers, on the
other hand, will want to see the price falling below the support and the
trendline to turn the bias more bearish and pile in for a drop into the 64000
level.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price is now near the upper bound of the average daily range for today, so it might be a bad
idea to pile in around these levels for the buyers as there’s a risk of a
pullback.

Upcoming
Catalysts

Tomorrow we have the US Job Openings and the US Consumer Confidence reports. On
Wednesday, we have the US Employment Cost Index and the FOMC Policy Decision.
On Thursday, we get the latest US Jobless Claims figures and the US ISM
Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP
report.

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