Errante’s Weekly Newsletter: 8th – 12th July 2024

Errante’s Weekly Newsletter: 8th – 12th July 2024 

Highlights of the Week: 

  • US Inflation Data: Key CPI releases expected to shape market expectations for future Fed rate decisions. 
  • Central Bank Insights: Fed Chair Powell’s testimony on Tuesday and Wednesday. 
  • Economic Indicators: GDP m/m from the UK and several significant US reports, including CPI, PPI, and Unemployment Claims. 

Welcome to another insightful edition of the Errante Weekly Newsletter. 

Now What? 

As we head into the week of July 8 – July 13, 2024, traders should prepare for a series of significant economic events that could drive market volatility and influence trading strategies. This week will be crucial for monitoring currencies such as the USD, GBP, and CNY, with key data releases and central bank activities providing critical insights. 

US Inflation Data: The Most Important Event of the Week 

The US inflation data, including CPI m/m, CPI y/y, and Core CPI m/m on Thursday, is the most crucial event of the week. These reports will provide insights into the inflationary pressures within the US economy. Inflation trends are pivotal for the Federal Reserve’s monetary policy decisions. Current projections indicate that headline inflation is expected to decrease from an average of 4.1% in 2023 to 2.6% in 2024, while core inflation is forecasted to decline to 3.0% in 2024 due to a decrease in services inflation. 

Impact on Fed Interest Rate Decisions 

Goldman Sachs projects core PCE inflation to fall to around 2.4% by December 2024, and the PCE Index is projected to fall to 2.1% by Q4 2024, averaging 2.3% for the year. These improvements are attributed to better supply chains, declining housing prices, and rebalancing in auto, labor, and housing rental markets. The Federal Reserve Bank of St. Louis expects inflation to drop below 2.5% in 2024, with average inflation from 2024 to 2028 expected to be just under the Fed’s 2.0% target. With the annual inflation rate at 3.3% and the core inflation rate at 3.4% as of May 2024, there is a 59% chance, according to the CME tool, that the Fed might cut interest rates in September if the upcoming inflation data confirms a downward trend. 

Other Key Events 

For the GBP, the GDP m/m report on Thursday will be pivotal in assessing the UK’s economic performance. Any deviations from expectations could lead to significant moves in GBP pairs. 

For the CNY, the CPI y/y and PPI y/y data on Wednesday will be critical in understanding inflationary trends in China, which could have broader implications for global markets. 

Market Events and Announcements 

The times below are GMT +3. 

Monday, July 8, 2024: 

  • No major economic events scheduled 

Tuesday, July 9, 2024: 

  • 5:00 PM – USD Fed Chair Powell Testifies 

Wednesday, July 10, 2024: 

  • 4:30 AM – CNY CPI y/y (Forecast: 0.3%, Previous: 0.3%) 
  • 4:30 AM – CNY PPI y/y (Forecast: -1.4%, Previous: -1.4%) 
  • 5:00 AM – NZD Official Cash Rate (Forecast: 5.50%, Previous: 5.50%) 
  • 5:00 AM – NZD RBNZ Rate Statement 
  • 5:00 PM – USD Fed Chair Powell Testifies 
  • 8:01 PM – USD 10-y Bond Auction 

Thursday, July 11, 2024: 

  • 9:00 AM – GBP GDP m/m (Forecast: 0.0%, Previous: 0.0%) 
  • 3:30 PM – USD Core CPI m/m (Forecast: 0.2%, Previous: 0.2%) 
  • 3:30 PM – USD CPI m/m (Forecast: 0.0%, Previous: 0.0%) 
  • 3:30 PM – USD CPI y/y (Forecast: 3.3%, Previous: 3.3%) 
  • 3:30 PM – USD Unemployment Claims (Forecast: 238K, Previous: 238K) 
  • 8:01 PM – USD 30-y Bond Auction 

Friday, July 12, 2024: 

  • 3:30 PM – USD Core PPI m/m (Forecast: 0.0%, Previous: 0.0%) 
  • 3:30 PM – USD PPI m/m (Forecast: -0.2%, Previous: -0.2%) 
  • 5:00 PM – USD Prelim UoM Consumer Sentiment (Forecast: 68.2, Previous: 68.2) 
  • 5:00 PM – USD Prelim UoM Inflation Expectations (Forecast: 3.0%, Previous: 3.0%) 

Market Insights: Key Charts to Watch 

Chart 1: Gold (Daily Time Frame) 

Gold has finally broken through the resistance at $2340 after a period of price compression, marking a bullish week. Increased speculation regarding the Federal Reserve’s potential rate cuts has placed the dollar in a downtrend, supporting continued growth in gold prices. In the upcoming week, inflation reports will provide crucial clues about price trends and future rate prospects. If the dollar weakens further with reduced risk aversion and lower interest rates, gold buyers might target the resistance at $2368.77. 

Impact of Upcoming Events: 

  • Positive Scenario: If US inflation data shows a significant decrease, it will bolster the case for Fed rate cuts, weakening the USD and potentially driving gold prices higher towards the resistance levels of $2368.77, $2389.20, and $2415.19. 
  • Negative Scenario: If inflation remains high, the USD could strengthen, leading to a pullback in gold prices. Key support levels to watch would be $2340.08 (100-day moving average). 

Chart 2: Apple Stock (Daily Time Frame) 

Apple’s stock continues its strong upward trend, successfully breaking the previous high of $218.88 following a pullback to its 34-day moving average. If investor risk appetite persists, the stock could target higher levels at $222.23, $226.49, and $231.20. 

Key Drivers for Apple Next Week: 

  • Upcoming Earnings: Positive performance expectations with estimated EPS of $1.33 and revenue of $83.84 billion for Q3 2024. 
  • Market Trends: High investor interest due to Apple’s AI developments and new product cycles. 

Impact of Upcoming Events: 

  • Positive Scenario: If earnings reports exceed expectations, it could drive Apple’s stock higher, aiming for resistances at $222.23, $226.49, and $231.20. 
  • Negative Scenario: If earnings disappoint, the stock could fall below $218.88, with key supports at $214.17 and $206.56. 

Errante’s Weekly Newsletter brings you critical market insights to keep you ahead in the financial world. Stay informed and make strategic decisions with Errante. 

If you have any questions or require any assistance, please contact one of our support team members via our Live Chat or email [email protected].

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