August 19, 2024
Another week of market volatility is expected as investors navigate a complex economic landscape. The US dollar strengthened against the Japanese yen after positive economic data. Investors await key economic reports and Federal Reserve news this week. Gold prices are high, while oil prices are stable. Overall, market conditions are uncertain.
KEY ECONOMIC INDICATORS
Fed minutes and economic signals:
- The release of the Federal Reserve’s minutes from their July meeting will be the centrepiece of the week.
- Investors will examine the details for signals about future interest rate hikes or possible shifts in the Fed’s approach to inflation.
- These minutes could be pivotal in shaping market expectations for the rest of the year.
Crude oil inventories:
- The EIA’s weekly inventory report showed stockpiles of crude oil rose 1.36mbbl last week, snapping a six-week streak of declines.
- Traders are on edge, as geopolitical tensions remain high.
Focus on housing market data:
- Next week, the U.S. housing market will be in the spotlight with the release of new and existing home sales data for July.
- As rising interest rates have started to weigh on housing demand, these reports will give investors a clearer picture of how the real estate market is holding up.
Technical Indications show us a potential incline in the various Markets, not taking into consideration the Fundamental Analysis, i.e., News, Reports, and Announcements.
CURRENCIES
Dow Jones index:
- S1-S3 – Means potential support points. If the market declines further, these are the potential levels it can reach.
- R1-R3 – Means potential resistance points. If the market starts to increase again, these are the potential levels it can reach.
Crude oil inventories expectations:
The Inventory Report is scheduled to be released this Wednesday, 21 August 2024.
Events since the last release of the Inventory Report:
- U.S. Crude Oil Inventories Fall for Third Straight Week.
- Both contracts were set to rise between 1.5% and 2% this week, with gains coming on the heels of some strong U.S. economic readings and signs of easing inflation in the country.
- Continued caution over an Iranian strike against Israel kept traders attaching a risk premium to crude after Hezbollah and Hamas were seen launching strikes against the country earlier this week.
Previous report figures and forecast figures for the latest release 1.357M (barrels of oil).
Forecast figures for 21 August 2024 – TBA (To be Announced) (barrels of oil).
USD/JPY outlook: Dollar pushes to 2-week high on solid sales
- US retail sales rose 1.0% in July.
- The likelihood of a 50 bps Fed rate cut in September dropped to 25%.
- US jobless claims fell to 227,000 with their last report released.
- The upbeat US economic reports followed inflation data showing a moderate increase. As a result, the market is optimistic that the Fed might achieve a soft landing.
Unwinds of stretched positions, U.S. recession fears and policy uncertainty have sparked big market swings.
The Bank of Japan’s sudden willingness to incorporate the Yen as a factor in setting policy accelerated an unwind of carry trades that use the low-yielding yen to buy other assets.
Market movers: Key instruments to follow this week
- USD/JPY
- GBP/USD
- Nasdaq100
- XAU/USD
- CRUDE OIL
MARKET NEWS
Gold prices hover close to record highs amid easing recession fears:
- Spot gold fell 0.1% to $2,453.02 an ounce
- Gold futures expiring in December fell 0.1% to $2,490.15 an ounce by 01:08 ET (05:08 GMT).
- Spot prices were trading up 0.9% for the week and were about $30 away from a record high.
- Silver futures fell 0.7% to $28.207 an ounce.
GBP/EUR exchange rate recovers on upbeat UK GDP:
- GBP/EUR was trading at around €1.1669, up around 0.2% from the morning’s opening level but still down from Wednesday’s high of €1.1726.
- The Pound (GBP) climbed on Thursday morning as the British currency drew support from the UK’s GDP figures for the second quarter of 2024.
- Looking ahead, Friday brings the UK’s retail sales figures for July – the final release this week after a slew of high-impact British data. British sales growth is forecast to have rebounded in July by 0.5% after June’s surprisingly steep drop of 1.2%.
Oil prices edge lower, but set for positive week as the economic outlook improves:
- Brent oil futures expiring in October fell 0.1% to $80.94 a barrel
- West Texas Intermediate crude futures fell 0.2% to $76.85 a barrel by 21:25 ET (01:25 GMT).
- China remained a key point of concern for oil markets, as economic activity in the world’s biggest oil importer showed little signs of improving.
- Concerns over China saw both the OPEC and the IEA downgrade their forecasts for oil demand growth in 2024, with the two citing policy uncertainty in the country and persistent weakness in its economy.
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