Week Ahead Analysis- 33

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Economic Calendar

  • Monday- French, Italian Bank Holiday
  • Tuesday- AUD Monetary Policy Meeting Minutes
  • Wednesday- NZD Cash Rate and Monetary Policy Meeting Minutes, GBP CPI, USD Retail sales
  • Thursday- FOMC Meeting Minutes
  • Friday- No Major News

Last week we observe more actions and higher volatility in the markets due to the softer-than-expected US CPI data. Does that mean that inflation has peaked? How will it affect Fed’s monetary policies moving forward? We are eager to find out and only time will tell. In this coming week, we will be focusing on minutes of past central bank meetings including the FOMC and RBA, coupled with the NZD cash rate and the UK’s CPI number. 

USD Outlook

Source: Investing.com

The chart above shows the market’s expectations for future rate hikes. The probability of a 50bps rate hike jumped from 42% last week to 69% this week. This indicates that the market is expecting the Fed to raise rates lower than the previously expected 75bps, which made the greenback plummet briefly last week. 

Forex

EURUSD

EURUSD Daily

USD weakens against most pairs following CPI announcements last week but it managed to recover swiftly. Based on the chart above, the dollar has recouped all losses against the Euro and is trading at a similar level pre-CPI. 

It seems a breakout to the upside for EURUSD is unlikely with the USD being in control and price closed firmly below 1.0265 support. 

Technical LevelsPrice Zone
R21.0360
R11.0265
S11.0115
S21.0000

Precious Metals

Gold

xauusd-daily

XAUUSD Daily

Gold sank as the market opened this morning, signaling a stronger dollar. It is now sitting on major support in the 1785 area and it will be key to see if it is able to bounce back.

If it breaks lower, then gold will be making a lower leg and breaking its previous swing low. That could set a bearish tone for the rest of the week. 

Technical LevelsPrice Zone
R21808
R11785
S11770
S21755

Energies

USOIL

usoil

USOIL H4

Oil price continued to trade lower as the market opened and it has shed more than 4.5% from its previous high. The slump could very well be due to weaker than expected economic growth in China while Saudi Aramco said it was ready to increase its production.

On the charts, the oil price is coming back down to retest the broken bearish channel with a low probability of it bouncing. If it trades lower we are looking at $87 for the next support level and for the price to continue trading within the channel until significant optimistic news comes out for the oil market. 

Technical LevelsPrice Zone
R298.50
R194
S187
S282.50

Ru Yi 
Financial Market Analyst

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