I wouldn’t replace my real dog with a robot driven by AI, would you?

Artificial Intelligence (AI) is transforming our world, introducing profound changes in numerous domains, including writing emails, browsing the web, and even stock picking and trading. Yet, as I watched my dog, Mika, the thought occurred to me: how far are we willing to let AI replace the authentic experiences in our lives?

Imagine a future where AI has evolved to such an extent that I could replace Mika with a robotic counterpart, one so perfectly designed that it would be nearly impossible to distinguish from a real dog. This AI-driven robot would be the epitome of a perfect pet, never misbehaving or causing inconveniences.

Impeccable fur is the new black

With her impeccable fur and flawless behavior, this robot dog would never wake me up in the middle of the night with incessant barking, or leave unwanted surprises on the floor. Continuously learning and adapting, she would evolve to meet my needs perfectly, embodying the ideal of a ‘good dog.’

Faced with this futuristic scenario, I asked myself: Would I replace Mika with this flawless robotic dog? To my surprise, the answer was a resounding no.

Why not? Simply put, there’s something irreplaceable about the authenticity of Mika, about her realness. I would choose a real dog over a robot, even if the latter promises superior productivity or performance.

This decision reflects a human preference that I believe will persist as AI continues to disrupt various sectors. While AI might streamline many tasks, it will not completely replace the human desire for authentic experiences.

What about AI taking over investing and stock picking?

The same principle applies to stock picking, but to a much lesser extent than my example with Mika. Some investors may have a favorite stock or company – take Tesla, for instance. They might totally love Elon Musk for various reasons, choosing Tesla not based solely on valuation related P/E multiples or any measurable factor, but for their personal human preference. Even when AI suggests alternatives that may perform better, they still choose Tesla – much like I choose Mika.

But why to a lesser extent? Because people would still thrive to invest to generate a profit and would, thus, be inclined to trust or at least test advanced AI driven investment tools. Still, there will always be people that just love Elon Musk like I love Mika, and would not let AI override that.

In a world increasingly driven by AI, where do we draw the line? How much of our authentic, human experiences are we willing to replace for the sake of productivity?

As for me, I wouldn’t trade Mika for a robot, no matter how perfect. What about you? Would you replace your beloved pet with an AI-driven robot? And what do you think about Elon and Tesla stock, anyway? Please comment below.

This article was written by Itai Levitan at www.forexlive.com.

Alongside a hold at key resistance in AUD/USD here, USD/JPY is the other major pair that might act as a saving grace for the dollar. The greenback looked to be in dire straits after last week’s rout but there is still one key technical level to watch despite the several breakdowns in EUR/USD, GBP/USD, and USD/CHF.

USD/JPY may have already fallen by roughly more than 700 pips at the lows this month but part of that owes to a sharper correction in the yen itself alongside BOJ speculation here.

Add that to the dollar suffering last week and we came close to testing the confluence of the 100 (red line) and 200-day (blue line) moving averages on Friday. That saw buyers step in to defend the level with the dollar also taking a bit of a breather, rebounding to back above 138.00 as seen currently.

The key support region is seen at 137.01-03 and that pretty much holds the key in unlocking the next potential leg lower for the dollar. A break below that sets the pair up for a potentially quick drop towards 135.00 next.

On the flip side, buyers could also reflect the strength of their conviction by holding at the key support region above. That will be a good baseline to work with in order to try and work out a rebound at least. Things are certainly heating up and the technicals are coming into extreme focus as we look towards the Fed and BOJ policy decisions next week.

The overall mood today is not as inviting as we saw in the past week or so but it is still early and we also got US retail sales data as a potential trigger coming up tomorrow.

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

UPCOMING EVENTS:

Monday:
PBoC MLF.

Tuesday:
US Retail Sales, Canada CPI.

Wednesday:
New Zealand CPI, UK CPI.

Thursday:
PBoC LPR, Australia Jobs Report, US Jobless Claims.

Friday:
Japan CPI, UK Retail Sales.

Monday:
There’s no expectations for the PBoC to cut the MLF rate as the recent comments
by the PBoC deputy governor Liu Guoqiang last Friday indicated that there’s no
fear of deflation as they expect inflation to have a U-shaped recovery in the
second half of the year. The Medium-Term Lending Facility Rate (MLF) is the
main rate at which the central bank lends to big commercial banks. The MLF acts
as a guide for the Loan Prime Rate (LPR).

Tuesday:
The US Retail Sales are expected to increase by 0.5% vs. 0.3% prior, while the
Core measure is seen at 0.3% vs. 0.1% prior. The Control Group is expected to
rise by 0.2% vs. 0.2% prior. The US data has showed strength lately and the
last week the big miss in US Core CPI coupled with the big jump in Consumer
Sentiment on Friday, is giving the soft-landing narrative a tailwind. The
Retail Sales report should miss by a very big margin to cause fear in the
markets at this point.

The Canada CPI Y/Y is expected at 2.9% vs.
3.4% prior and the M/M figure at 0.3% vs. 0.4% prior. The Bank of Canada is
focused on underlying inflation measures for its policy decisions, so the data
points to watch are the Core CPI and the BoC’s favourite measures: CPI-common
expected at 5.0% vs. 5.2% prior, CPI-trimmed expected at 3.6% vs. 3.8% prior and
CPI-median expected at 3.7% vs. 3.9% prior.

Wednesday:
The New Zealand CPI (Q2) Y/Y is expected at 5.9% vs. 6.7% prior, while the Q/Q
reading is seen at 0.9% vs. 1.2% prior. The RBNZ last week left its official
cash rate unchanged at 5.5% as expected as the central bank aims at “remaining
at the restrictive level for the foreseeable future to ensure that consumer
price inflation returns to the 1-3% annual target range”.

The UK CPI Y/Y is expected at 8.2% vs.
8.7% prior and the M/M figure is seen at 0.4% vs. 0.7% prior. The Core CPI Y/Y
is expected at 6.8% vs. 7.1% prior, while the M/M reading is seen at 0.4% vs.
0.8% prior. Last time both the employment and inflation reports surprised to
the upside and prompt the BoE to surprise with a 50-bps rate hike. This time
the employment report surprised on the wages side but missed on the jobs side,
so if we see a miss in the data, the BoE should go ahead with a 25-bps
increase. On the other hand, if the data runs hot again, they should hike by
another 50 bps.

Thursday: The PBoC is likely to change the LPR rates
only if it surprises with a change in the MLF rate on Monday.

Last time the Australian Jobs report
surprised to the upside across the board. This time the expectations are for
Employment Change to increase by 17.0K vs. 75.9K prior and the Unemployment
Rate to remain unchanged at 3.6% and the Participation Rate at 66.9%. The RBA
would like some softening in the labour market to bring inflation back to
target.

The US Initial Claims are expected at 243K
vs. 237K prior and Continuing Claims at 1725K vs. 1729K prior. The US Labour
Market remains very strong and we haven’t seen any notable sign of weakness yet
with Jobless Claims still running near record lows.

Friday:
The Japan CPI Y/Y is expected at 3.5% vs. 3.2% prior and the Core Y/Y reading
is seen at 3.3% vs. 3.2% prior. The CPI ex-Food & Energy Y/Y is expected at
4.2% vs. 4.3% prior which is the highest reading in four decades. The BoJ is
still stuck with its dovish monetary policy, and they haven’t hinted to any
change at the upcoming meeting. Nevertheless, there are expectations for a
tweak in the YCC policy as the BoJ is seen raising its FY2023 inflation
forecast above 2% and a former BoJ director said that he expects the central
bank to widen the YCC band from -/+ 0.50% to -/+1.00% at the July meeting.

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

• S&P and NASDAQ snap four-day winning streak. Dow up for the 5th consecutive day
• Bank of Canada’s Macklem: Our forecast has inflation moving around 3% most of next year
• WTI crude oil futures settle at $75.42
• What earnings will be released next week?
• Baker Hughes oil rig count -3 to 537
• European major indices move modestly lower today but have solid gains for the week
• University of Michigan preliminary sentiment for July 72.6 versus 65.5 estimate
• Feds Goolsbee: There is a path to curb inflation without recession
• J.P. Morgan’s Dimon: The headwinds in the economy are substantial
• US import prices for June -0.2% versus -0.1% expected. YoY import prices -6.1%
• Canadian manufacturing sales for May 2023 1.2% versus 0.8% expected
• WSJ Timiraos: July is all but decided. Hawks already pushing for September
• The EUR is the strongest and the JPY is the weakest as the North American session begins.
• ForexLive European FX news wrap: Dollar rout hits pause for now

Today, the US Dollar rallied, stimulated by rising preliminary inflation expectations from the University of Michigan’s monthly consumer survey and overall stronger data. The bond yields also recorded a sharp incline.

The inflation reading depicted a minor increment, moving from 3.3% to 3.4%. Given a market that has reacted positively to the favorable CPI and PPI data this week, even the slightest gains in inflation have somewhat deflated the narrative of receding inflation.

Further, consumer sentiment indices also demonstrated a significant uplift:

• Consumer sentiment surged to 72.6 from 64.4 last month
• Current conditions ascended to 77.5 from 69.0 in the previous month
• Expectations climbed to 69.4 from 61.5 last month

In currency performances, the Euro marginally edged out the USD as the strongest among the major currencies, with the USD depreciating by 0.02% against the Euro. However, the dollar posted substantial gains against other currencies, most notably against the Canadian Dollar (+0.86%) and the Australian Dollar (+0.76%). Furthermore, the USD/JPY pair also saw an increase of 0.59%.

Although higher today, the US dollar is ending the trading week with declines vs all the major currencies. Below are the changes vs the majors:

• EUR, -2.34%
• GBP, -1.98%
• JPY, -2.38%
• CHF, -3.06%
• CAD, -0.46%
• AUD, -2.15%
• NZD, -2.60%

This week’s lower inflation readings from the Consumer Price Index (CPI) and Producer Price Index (PPI) have spurred hopes among traders that the Federal Reserve may opt for just one more rate hike in 2023. This expectation persists despite indications from several Fed officials, including Fed’s Daly and Waller, that two hikes still remain the most likely scenario.

Fed’s Waller highlighted that the September meeting still holds possibilities (although most anticipate the Fed would bypass that meeting) and maintained that he foresees „two more 25-basis-point hikes in the target range over the four remaining meetings this year as necessary to keep inflation moving toward our target.“

Earlier in the week, prior to the release of inflation data, Fed’s Daly suggested that two hikes were still probable. However, she slightly backtracked yesterday, clarifying that her comments were intended to keep open the possibility of an additional hike this year.

The Federal Reserve will announce its next rate decision on July 26. The subsequent meetings are slated for September 20 and November 1, offering an opportunity for two more sets of unemployment and inflation data before the September meeting, and three more before the November meeting. This will provide ample data to ascertain whether the decline in inflation has run its course and is reverting to an upward trajectory, or if it continues to decelerate.

This week the market was full of optimism for a Goldilocks economy with growth remaining but inflation moving lower.

In the US debt market today, yields corrected higher after falling lower earlier this week. For the day:

• 2-year yield 4.767% +15.7 basis points
• 5-year yield 4.045%, +11.0 basis points
• 10-year yield 3.830% +7.1 basis points
• 30-year yield 3.925% +3.1 basis points

For the trading week yields were still lower:

• 2-year yield fell -17.8 basis points
• 5-year yield fell -31 basis points
• 10-year yield fell -23 basis points
• 30-year yield fell -11.7 basis points

The lower yields and lower dollar – along with the Goldilocks scenario – helped to boost stocks this week:

• Dow industrial average added 774 points or 2.29%
• S&P index added 106.45 points or 2.42%
• NASDAQ index added 452.98 points or 3.32%

The NASDAQ gain was the largest since the week of March 27, 2023.

In Europe, the major indices were mostly lower today, but like US indices, they had strong gains for the week:

• German DAX, +3.22%
• Frances CAC, +3.69%
• UK’s FTSE 100, +2.45%
• Spain Ibex, +2.05%
• Italy’s FTSE MIB, +3.19%

In the Asian Pacific market:

• Japan’s Nikkei 225 rose 2.42%
• Hong Kong’s Hang Seng index increased 5.71%
• China’s Shanghai composite index rose 1.28%
• Australia’s S&P/ASX index rose 3.7%

European benchmark 10 year yields fell sharply:

• Germany, -15.9 basis points
• France, -15.2 basis points
• UK, -27.3 basis points
• Spain -15.7 basis points
• Italy -18.6 basis points

Canada’s 10-year yield fell by -20.7 basis points this week.

Next week, the US earning season will continue with more large financials including:

• Bank of America
• Morgan Stanley
• Charles Schwab
• PNC financial
• Bank of New York
• Goldman Sachs
• American Express

A significant number of regional banks, believed to be more susceptible to earnings fluctuations, are set to release their earnings announcements next week. Among the top 15 stocks in the KRE ETF (exchange-traded fund) designated for regional banks, 12 will be delivering reports. These 12 institutions represent roughly 25% of the index’s composition. According to sources, 60% of the KRE holdings will be announcing.

Other big names announcing next week include:

• Tesla, Netflix and IBM on Wednesday
• Johnson & Johnson, American Airlines, United Airlines and Travelers will announce earnings on Thursday

Looking ahead the week of July 24 will be the „big“ week for the large cap leaders:

• Alphabet is scheduled on Monday, July 24
• Microsoft is scheduled on Tuesday, July 25
• Amazon, Meta and Boeing are scheduled on Wednesday, July 26
• Bristol Myers Squibb, Intel, McDonald’s and Northrop Grumman are scheduled on Thursday, July 27

Nvidia is not scheduled to announce until toward the end of August.

Below is a summary of some of the major economic releases scheduled for release next week (times are ET)

Sunday, July 16

• 10:00 PM: China’s GDP for Q2 (Forecast: 7.1%, Previous: 4.5%)
• 10:00 PM: China’s Industrial Production YoY (Forecast: 2.5%, Previous: 3.5%)

Monday, July 17

• 8:30 AM: U.S. Empire State Manufacturing Index (Forecast: -3.5, Previous: 6.6)
• 9:30 PM: Australia’s Monetary Policy Meeting Minutes

Tuesday, July 18

• 8:30 AM: Canada’s CPI MoM (Forecast: 0.3%, Previous: 0.4%)
• 8:30 AM: Canada’s Median CPI YoY (Forecast: 3.7%, Previous: 3.9%)
• 8:30 AM: Canada’s Trimmed CPI YoY (Forecast: 3.6%, Previous: 3.8%)
• 8:30 AM: U.S. Core Retail Sales MoM (Forecast: 0.4%, Previous: 0.1%)
• 8:30 AM: U.S. Retail Sales MoM (Forecast: 0.5%, Previous: 0.3%)
• 6:45 PM: New Zealand’s CPI QoQ (Forecast: 0.9%, Previous: 1.2%)

Wednesday, July 19

• 2:00 AM: UK’s CPI YoY (Forecast: 8.2%, Previous: 8.7%)
• 9:30 PM: Australia’s Employment Change (Forecast: 16.5K, Previous: 75.9K)
• 9:30 PM: Australia’s Unemployment Rate (Forecast: 3.6%, Previous: 3.6%)

Thursday, July 20

• 8:30 AM: U.S. Unemployment Claims (Forecast: 242K, Previous: 237K)

Hope you have a great weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The broader S&P and NASDAQ index snapped 4-day winning streaks, while the Dow industrial average extended its streak to 5 days. UnitedHealth soared by 7.27% today and was responsible for over 200 points of the Dow’s gains today. The Dow closed up $113.89 points.

A snapshot of the market shows

• Dow industrial average rose 113.89 points or 0.33% at 34509.04
• S&P index fell -4.64 points or -0.10% at 4505.41
• NASDAQ index fell -24.88 points or -0.18% at 14113.69

The small-cap Russell 2000 fell -19.80 points or -1.01% at 1931.08

The winning sectors today were led by:

• Healthcare, +1.5%
• Consumer staples +0.35%
• Consumer discretionary, +0.27%

The lagging sectors today included:

• Energy -2.75%
• Financials -0.68%, and
• Communication services, -0.62%

The top Dow stocks this week included:

• Salesforce +9.42%
• 3M +5.15%
• Home Depot +4.55%
• Caterpillar was 4.27%

The laggards of the Dow this week included:

• Verizon -5.21%
• Travelers -3.33%
• Merck -1.5%
• Cisco -1.20%

A look at the major indices this week showed gains across the board:

• Dow industrial average rose 2.29%
• S&P index rose 2.42%
• NASDAQ index rose 3.32%
• Russell 2000 rose 3.56%

This article was written by Greg Michalowski at www.forexlive.com.

BOC’s Macklem comments in a Globe and Mail article

• Inflation is going to be around 3% going forward
• Surprised by ongoing strength in demand in the economy, and persistence of underlying inflationary pressures
• Labor markets have eased a bit but remained a very tight
• Our forecast has inflation hovering around 3% for next year and then gradually moving back to 2% target
• Need to see a better balance in the labor market and we need to see wage growth moderate

Despite the more hawkish tilt, the USDCAD is trading to a new session high. The price moved above its 100-hour moving average at 1.31937. Its 200-hour moving average looms above at 1.3242. The price is also above its 38.2% retracement of the move down from last week’s high. That level comes in at 1.31937.

For an updated view of the technicals as we head into the close and into the new trading week, click on the video below.

This article was written by Greg Michalowski at www.forexlive.com.

The

The price of WTI crude futures is settling at $75.42. That’s it down $-1.47 or -1.91%. Although down nearly 2% today, the price this week is still up 2.09% helped by a more positive technical view.

Looking at the daily chart, the price moved above its 100-day moving average on Tuesday’s trade at $73.68 (blue line in the chart above). The price extended higher on that day and continued the rally on Wednesday and Thursday where the price started to test its higher 200-day moving average. That level comes in at $77.32 (green line in the chart above).

The high price today stalled against that level (the high reached $77.30) and buyers turn to sellers. On the daily chart, the price came back down toward the June 5 low near $75.06. The low price today reached $75.11 just above that level.

Drilling to the hourly chart, the fall lower today also stalled against its 100-hour moving average (blue line in the chart below).

So going into the new trading week, the 100-hour moving average and swing level from June 5 will define support. Move below and the bias would have traders looking toward the 100-day moving average is $73.68. On the topside, the 200-day moving average at $77.32 becomes the key target to still get to and through.

This article was written by Greg Michalowski at www.forexlive.com.

The USDCHF broke sharply to the downside this week following the dollar’s move lower on the back of lower CPI and PPI. The prices of imports also came in lower with the YoY now down -6.1%. That sent yields lower and it pressured the USDCHF as well.

Technically, the price fell below January 2021 at 0.87568. It would ultimately take a move above that level to hurt the sellers looking for more downside momentum on the major break. Ahead of that the 2014 lows near 0.86959 may be a closer target that if broken would give a short-term tilt in the favor of the buyers.

Drilling to the hourly chart below, the yellow area represents the swing levels off of the daily chart from 2014 and 2021’s. In between sets the falling 100-hour moving average which currently comes at 0.87102. That moving average will likely be the 1st target resistance to get above if the buyers are to take control (it is moving down at a fairly rapid clip).

Ultimately if the price of the USDCHF gets above the 100-hour moving average, it is just step one in the rebuilding of any sort of buyer’s control.

• The low from 2014 at 0.86959,
• The 38.2% retracement of the move down from the July 6 high at 0.87304, and
• The 2014 low at 0.87568

Are ALL targets that would need to be broken to give the buyers more control, and also start to worry the sellers.

The current price at 0.8618 is still a bit always from those levels.

This article was written by Greg Michalowski at www.forexlive.com.

Dollar technicals:

• A bit of a breather so far today
• It’s been an exceptional week for the euro and pound against the dollar
• USD/CHF has got that old saying in markets written on it
• AUD/USD upside push stalls at the June highs, at least for now

Headlines:

• US announces to automatically forgive $39 billion in student debt
• China invites global investors for rare symposium next week – report
• BOJ announces to host first discussion on long-term policy review in December
• Eurozone May trade balance -€0.3 billion vs -€11.7 billion prior
• Germany June wholesale price index -0.2% vs -1.1% m/m prior
• Switzerland June producer and import prices 0.0% vs -0.3% m/m prior

Markets:

• EUR leads, JPY lags on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields up 0.7 bps to 3.765%
• Gold down 0.1% to $1,958.60
• WTI crude flat at $76.89

It was a quieter session in Europe today as markets are taking a bit of a breather after all the hot and heavy action in the past two days.

The dollar slide is being arrested somewhat, at least for now, as we wait on Wall Street to step into the fray before the weekend comes along. EUR/USD was little changed throughout the session, keeping around 1.1220-30 levels mostly. GBP/USD is down 0.1% to 1.3120 while USD/CHF is flat at 0.8585 currently.

The Japanese yen was a decent mover on the day, with USD/JPY falling to a low of 137.25 in Asia before recovering some poise tohold around 138.40 on the day.

The overall risk mood is also calmer today, after the surging gains in tech stocks this week. That is keeping the aussie and kiwi in check as well with AUD/USD down 0.3% to 0.6870 and NZD/USD down 0.1% to 0.6385 at the moment.

Well, the technicals continue to look bleak for the dollar and given the recent momentum, it might just be a matter of time before we see a resumption of the dollar selling and risk buying.

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

The US CPI missed
across the board this week causing big moves as the market expected the Fed to
end its tightening cycle really soon. The probabilities of a July rate hike
though remained unchanged due to the tight labour market and the lack of hints
for a skip or a pause from the Fed members after the CPI release. Nevertheless,
the market is now looking forward to when the data will start to point to rate
cuts and Gold should be supported as a result.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the 61.8% Fibonacci retracement level
managed to stop the fall in Gold eventually. The price has broken to the upside
the downward trendline and then
the key 1934 resistance after
the CPI report and it’s now looking at the 1984 resistance. The moving averages have
crossed to the upside again indicating a change in trend.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the price is
consolidating a bit after the big run to the upside after the miss in the US
CPI report. The bias now is bullish as the moving averages are crossed to the
upside and there’s no real technical resistance until the 1984 level.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
have a good support zone at the trendline where there’s also the 38.2%
Fibonacci retracement level for confluence. The
buyers should step in here with a defined risk below the trendline and target
the 1984 resistance. The sellers, on the other hand, will want to see the price
breaking lower to pile in and extend the fall into the 1934 support.

Upcoming Events

Today we have the
University of Michigan Consumer Sentiment report, but it’s unlikely to cause
big moves in the markets unless we see some notable deviation from the expected
numbers. The market though is likely to focus more on the inflation
expectations figures and a lower-than-expected reading there, especially on the
long-term expectations, should give Gold some more support.

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