The previous week was a very intensive one when it comes to US macro data. Certainly, the most important weekly event was the FOMC meeting, where the Fed left interest rates unchanged at current levels. As per information by Fed Chair Powell, the economy is in a solid condition. Growth is at a moderate pace, with some decrease due to decrease in consumer spending. Although inflation remains relatively near to the targeted level of 2%, still, there are some indications of its modest pick-up, as a reflection of implemented tariffs. The Fed will continue further to balance interest rates based on “the incoming data, the evolving outlook and the balance of risks”. The full effects of implemented tariffs is to be seen in the future period, but there are Fed expectations that these effects might be a one-time effect on inflation. Fed Chair Powell did not provide a clear answer regarding the potential cut of interest rates in September.
On the other hand, the bulk of important macro data was released during the previous week, providing some insight to investors that the economy is starting to see the effects of tariffs, but also increasing their expectations that the rate cut might occur in September. The week started with JOLTs Job Openings data for June, which reached 7.437M and were lower from expected 7,55M. The GDP Growth Rate estimate for Q2 is 3% for the quarter, which was better from forecasted 2,4%. The PCE Price Index in June reached 0,3% for the month and 2,6% for the year. At the same time, the core PCE was also standing at 0,3% in June. Personal Income increased by 0,3% in June, while Personal Spending also reached 0,3% in the same period. Huge weekly surprises were the Non-farm payrolls which were increased by 73K in July, well below market estimate of 110K. The unemployment rate modestly increased to the level of 4,2% in July from 4,1% posted previously. Friday brought the University of Michigan Consumer Sentiment final for July at the level of 61,7 which was fully in line with market expectations. The five years inflation expectations were further decreased to the level of 3,4% from previous 4%.
Data posted for the Euro Zone include the GDP Growth rate estimate for Q2 of 0,1% for the quarter and 1,4% on a yearly basis. Both figures were higher from estimated 0% q/q and 1,2% y/y. The GDP Growth Rate in Germany in Q2 was standing in the negative territory of -0,1% for the quarter and +0,4% on a yearly basis. The inflation rate in Germany preliminary for July was standing at 0,3% for the month and 2% y/y. The inflation rate flash in July in the Euro Zone was 2%, just a bit higher from market estimate of 1,9%. The core inflation reached 2,3%.
The week full of important macro data guaranteed higher volatility in the value of the U.S. Dollar. During the first half of the week, markets favored the USD, which reached the highest value against the euro at 1,14. However, Friday trading session and the release of surprisingly weak NFP data, brought the value of currency pair back toward the 1,1586 level. The RSI modestly touched the level of 31 and swiftly turned back toward the 48. Clear oversold market side has not been reached on this occasion. The MA 50 slowed down its divergence from MA200, but with a still large distance between the two lines, the cross is not in the store for some time.
Markets will use the week ahead to digest all the data posted during the previous week. For the US there are no currently important data scheduled for a release, in which sense, market moves could be much calmer. During the previous week, the support line at 1,14 has been tested, however, the 1,16 resistance is pending clear testing. In this sense, it is possible that the market will start the week ahead with a move toward the 1,16 level, heading toward 1,650 eventually 1,1680. At this moment on charts there is a lower probability for 1,17 levels. A move toward the down side is also probable, where 1,15 is currently marked on charts.
Important news to watch during the week ahead are:
EUR: Retail Sales in June in the Euro Zone, Balance of Trade in June in Germany, Industrial Production in June in Germany,
USD: ISM Services PMI in July.
On the other hand, the bulk of important macro data was released during the previous week, providing some insight to investors that the economy is starting to see the effects of tariffs, but also increasing their expectations that the rate cut might occur in September. The week started with JOLTs Job Openings data for June, which reached 7.437M and were lower from expected 7,55M. The GDP Growth Rate estimate for Q2 is 3% for the quarter, which was better from forecasted 2,4%. The PCE Price Index in June reached 0,3% for the month and 2,6% for the year. At the same time, the core PCE was also standing at 0,3% in June. Personal Income increased by 0,3% in June, while Personal Spending also reached 0,3% in the same period. Huge weekly surprises were the Non-farm payrolls which were increased by 73K in July, well below market estimate of 110K. The unemployment rate modestly increased to the level of 4,2% in July from 4,1% posted previously. Friday brought the University of Michigan Consumer Sentiment final for July at the level of 61,7 which was fully in line with market expectations. The five years inflation expectations were further decreased to the level of 3,4% from previous 4%.
Data posted for the Euro Zone include the GDP Growth rate estimate for Q2 of 0,1% for the quarter and 1,4% on a yearly basis. Both figures were higher from estimated 0% q/q and 1,2% y/y. The GDP Growth Rate in Germany in Q2 was standing in the negative territory of -0,1% for the quarter and +0,4% on a yearly basis. The inflation rate in Germany preliminary for July was standing at 0,3% for the month and 2% y/y. The inflation rate flash in July in the Euro Zone was 2%, just a bit higher from market estimate of 1,9%. The core inflation reached 2,3%.
The week full of important macro data guaranteed higher volatility in the value of the U.S. Dollar. During the first half of the week, markets favored the USD, which reached the highest value against the euro at 1,14. However, Friday trading session and the release of surprisingly weak NFP data, brought the value of currency pair back toward the 1,1586 level. The RSI modestly touched the level of 31 and swiftly turned back toward the 48. Clear oversold market side has not been reached on this occasion. The MA 50 slowed down its divergence from MA200, but with a still large distance between the two lines, the cross is not in the store for some time.
Markets will use the week ahead to digest all the data posted during the previous week. For the US there are no currently important data scheduled for a release, in which sense, market moves could be much calmer. During the previous week, the support line at 1,14 has been tested, however, the 1,16 resistance is pending clear testing. In this sense, it is possible that the market will start the week ahead with a move toward the 1,16 level, heading toward 1,650 eventually 1,1680. At this moment on charts there is a lower probability for 1,17 levels. A move toward the down side is also probable, where 1,15 is currently marked on charts.
Important news to watch during the week ahead are:
EUR: Retail Sales in June in the Euro Zone, Balance of Trade in June in Germany, Industrial Production in June in Germany,
USD: ISM Services PMI in July.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.