July 5, 2023
U.S. stock futures showed little change on Tuesday night as Wall Street prepared to resume trading after the Fourth of July holiday. Dow Jones Industrial Average futures declined by 0.1%, while S&P 500 and Nasdaq 100 futures dipped by less than 0.1%.
The market had closed early on Monday, with slight gains in the Dow Jones, S&P 500, and Nasdaq Composite. The positive session followed a strong first half of the year, particularly for the Nasdaq Composite and S&P 500, which experienced their best starts since 1983 and 2019, respectively.
Market participants remain optimistic about a potential rally in the second half of the year, despite the possibility of a pullback later on.
Investors are keeping an eye on upcoming economic indicators, such as May factory orders data, which is expected to show a rise of 0.6% compared to the previous month. Additionally, the release of June’s Federal Reserve meeting minutes at 2 p.m.
ET will provide insight into the future of interest rate hikes. New York Fed President John Williams is scheduled to speak later in the day at the 2023 Annual Meeting of the Central Bank Research Association (CEBRA) in New York City.
Overall, with the holiday period ending, traders are cautiously anticipating the market’s direction, while remaining hopeful for a potential rally in the second half of the year.
Data by Bloomberg
The stock market is closed on Tuesday due to Independence Day in the US.
On Monday, the overall market showed a slight increase of 0.12%. Among the different sectors, Consumer Discretionary experienced the highest growth with a positive change of 1.07%, followed by Real Estate at 0.85% and Consumer Staples at 0.69%.
Utilities and Financials also saw positive gains with increases of 0.67% and 0.54% respectively. Energy and Materials both had modest growth of 0.31%. Communication Services had a minimal increase of 0.13%, while Industrials only saw a slight rise of 0.07%. On the other hand, Information Technology suffered a decline of -0.31%, and Health Care experienced the largest decrease with a negative change of -0.82%.
Major Pair Movement
The GBP/USD pair displayed resilience by closing up 0.2% despite the strengthening of the US dollar, while the EUR/GBP pair experienced a decline of 0.5%. This strength in the British pound can be attributed to varying expectations regarding interest rate hikes, which are providing a solid foundation of support.
Despite the challenges posed by the stronger US dollar, the pound managed to hold its ground and maintain a positive trajectory.
The AUD/USD pair commenced trading with a 0.31% increase, following a relatively calm session influenced by holiday factors. The Australian dollar (AUD) managed to gain against all major currencies except for the New Zealand dollar (NZD).
Market participants brushed off the Reserve Bank of Australia’s decision to pause, as an underlying hawkish bias remained intact. The positive sentiment surrounding the AUD/USD pair reflected the market’s indifference towards the central bank’s cautious approach.
The EUR/USD pair began trading with a decline of 0.35% after a quiet session influenced by holiday-related factors. The selling pressure on the euro (EUR) against the Japanese yen (JPY) contributed to this lower opening.
The EUR/USD pair faced challenges due to the light selling of EUR/JPY, which weighed on its performance. The impact of the holiday season was felt in the market, resulting in subdued trading activity and influencing the euro’s initial weakness against the US dollar (USD).
Picks of the Day Analysis
EUR/USD (4 Hours)
EUR/USD Modestly Falls on Quiet Day, Focus Shifts to FOMC Minutes and US Labor Market Data
The EUR/USD experienced a slight decline on a quiet day in the financial markets, with limited price action due to a US holiday. The Euro lagged behind the pound without any significant economic reports. Volatility is expected to increase on Wednesday with the release of Eurozone economic data and the FOMC minutes.
Market participants remained cautious on US Independence Day, but trading activity is expected to return to normal. The focus is now on the FOMC minutes and upcoming US labour market data, which will influence expectations regarding the actions of the Federal Reserve.
In the Eurozone, the May Producer Price Index (PPI) is anticipated to show a decline, providing some positive news for the European Central Bank (ECB).
Additionally, the final reading of the Markit Services PMI is due, with no major revisions expected.
Chart EURUSD by TradingView
According to technical analysis, the EUR/USD pair remained unchanged on Tuesday and reached the middle band of the Bollinger Bands. Currently, the price is slightly below the middle band, indicating a possible downward movement towards the lower band.
The Relative Strength Index (RSI) is currently at 43, suggesting that the EUR/USD is in a neutral position but slightly bearish.
Resistance: 1.0926, 1.0965
Support: 1.0842, 1.0790
XAU/USD (4 Hours)
Spot Gold (XAU/USD) Holds Near Weekly High as Financial Markets Remain Quiet on Independence Day
Spot Gold maintained its position near the weekly high reached on Monday at $1,930.98, extending its gains for the fourth consecutive day. With the United States observing Independence Day and no significant news developments, financial assets remained stagnant, trading within familiar levels.
The Reserve Bank of Australia (RBA) announced no change to the Official Cash Rate (OCR) at 4.1%, noting that inflation in the economy has peaked. Initially, the decline in the Australian dollar provided support to the US Dollar, but the American currency reversed its course and weakened against most major counterparts, buoyed by stable Asian shares.
However, European markets closed in the negative territory. Market participants eagerly awaited upcoming labour market updates from the United States scheduled for the latter half of the week, as the macroeconomic calendar offered little else of significance.
Chart XAUUSD by TradingView
According to technical analysis, the XAU/USD pair is experiencing an upward movement on Tuesday, with the potential to reach the upper band of the Bollinger Bands. Currently, the price is slightly below the upper band and may potentially move downward towards the middle band of the Bollinger Bands. The Relative Strength Index (RSI) currently stands at 55, having fallen from a higher level, indicating a neutral stance for XAU/USD.
Resistance: $1,932, $1,939
Support: $1,911, $1,903
