Spreads
Spreads
Spreads
Spreads
Spreads
(All data taken from MT4 VT Markets)
(Picture taken from forexfactory.com)
This week, we are anticipating several important events.
The Bank of Japan (BoJ) Outlook Report and the European Central Bank (ECB) interest rate decisions will take place on Thursday. We expect to see the ECB raise their interest rates.
Consumer Price Index data in the UK and Canada will also be released, giving insights into the inflation condition in those countries.
Other important data to watch out for are the release of the Monetary Policy Meeting Minutes from Australia and Purchasing Manager Index data from US and Germany.
The Reserve Bank of Australia increased the cash rate by 50 bps to 1.35% during its July 2022 meeting. The move followed June’s 50-bps hike and a 25-bps increase in May, bringing the cash rate to a level not seen since May 2019.
The committee reaffirmed its commitment to taking necessary measures to ensure inflation returns to a target level while paying attention to the global outlook, which stays clouded by the geopolitical conflict in Ukraine and its effect on energy prices and commodities.
On Wednesday, Canada will release its monthly CPI data, and the UK will release its annual CPI data.
As one of the indicators of inflation, the CPI data will also show how bad inflation is in that country. The higher the inflation rate, the higher the potential for the central bank to raise interest rates.
The Bank of Japan left its key short-term interest rate unchanged at -0.1% and for 10-year bond yields around 0% during its June meeting by a majority 8-1 vote. The board said it would offer to buy unlimited amounts of the bonds to defend an implicit 0.25% cap every market day, repeating the guidance on market operations it made in April.
Policymakers viewed that Japan’s economy has picked up, despite some weakness due to the impact of COVID-19 and surging commodity prices. The BoJ reiterated that it would not hesitate to take extra easing measures if needed.
Most ECB policymakers favoured a 25bps rate hike in July. Still, some officials preferred to keep the door open for a larger increase, minutes from the ECB June Monetary Policy meeting showed.
During its June meeting, the ECB said it would end net asset purchases under its APP as of 1st July 2022 and raise key ECB interest rates by 25 bps in July.
Germany’s Manufacturing PMI fell to 52 in June from 54.8 in May, indicating the slowest growth in factory activity since July 2020. Firms grew more pessimistic about the outlook due to concerns over high inflation, continued supply disruption, and shrinking order books.
Meanwhile, Germany’s Services PMI was 52.4 in June 2022, the slowest growth in services activity in five months, reflecting the easing of post-lockdown catch-up effects, rising economic uncertainty, and sustained strong price pressures. Business expectations were at their lowest since October 2020.
US Services PMI was revised higher to 52.7 in June from a preliminary estimate of 51.6, down from 53.4 in May, indicating the weakest rise in activity since January.
Firms often pass higher costs to their customers, but efforts to stimulate demand led to a further slowdown. Business confidence regarding the year ahead outlook dropped to a 21-month low.
The USD index (USDX) grew stronger last week to break our Resistance Levels, following the latest US inflation report, which showed that consumer prices are continuing to rise.
This week, we can see that the USD index might go a little bit slower as there are no high-impact events in the US.
In the Weekly Timeframe, we can see that the Stochastic Indicator is still steady in the overbought Levels, indicating there is potential for sudden reversal.
USD Index may try to reach our Resistance at 108.34 and 109.22 but may also move between 105 and 108 this week. The weekly price is still way above the 20, 50, and 200-candle Moving Averages.
Meanwhile, in the H4 Timeframe, we can see that the Stochastic Indicator is at the oversold level, which means that the current price is possibly considered low for the market. Our Support Levels in H4 are at 107.48 and 107.26, similar to the 50-candle moving average, with Resistance Levels at 108.34 and 108.55.
The USD Index’s price moved below the 20-candle Moving Average, which means there’s also a possibility that the market will be slightly lower.
Weekly Resistance: 108.34, 109.22
Weekly Support: 105.56, 104.69
H4 Resistance: 108.34, 108.55
H4 Support: 107.48 and 107.26
Last week, Gold prices slipped below the $1700 level, resulting in a fifth straight weekly loss, which broke our Support Level at $1722 and ended the week at $1707, above our next Support Level at $1687. We can see that there’s possibly some slower-ranging movement for this week.
In the Weekly Timeframe, we can see the Stochastic Indicator showing lower movement yet nearing the oversold level. Gold’s next target is our Weekly Support Level at $1687 and $1675, which is similar to the 200-candle Moving Average, while our Resistance Levels will be at $1744 and $1763.
We also can see that the price is still below the 20 and 50 Moving Averages but higher than the 200 Moving Average.
Meanwhile, in the H4 Timeframe, we can see the Stochastic Indicator showing a potential reversal to a higher movement, yet the price is still below all the 20, 50 and 200 Moving Averages.
We can see that the price will rise slightly in the H4 Timeframe to try to reach our H4 Resistance levels at $1722 and 1734 before eventually going lower to try to break the H4 Support Level at $1698.
Weekly Resistance: $1744, $1763
Weekly Support: $1687, $1675
H4 Resistance: $1722, $1734
H4 Support: $1698
