The Week Ahead 31st July – 4th August: will the BOE and the RBA join the Fed and the ECB?

Welcome to Key to Markets preview of the Week Ahead.
<h2>Currency Pair Performance</h2>
5-day performance as of July 27, 2023. 11:00 GMT.
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24625" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-1-4.png" alt="" width="629" height="275" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-1-4.png 629w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-1-4-300×131.png 300w" sizes="(max-width: 629px) 100vw, 629px" />
Source: finviz.com
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<h2>10 Big Stories Last Week</h2>
In case you missed it…
Fed hiked rates to a 22-year high. The Fed raised rates by 25 bps to 5.25% -5.5%, its 11th hike in 12 meetings. Powell left the door open for further hikes.
Alphabet rose 6.5% after impressive earnings. The Google parent beat expectations on both the top and bottom line. Digital advertising and cloud revenue rose, impressing investors.
ECB hiked interest rates for the 9th time. The ECB raised rates by 25bps as expected, taking the deposit rate to 3.75%. The ECB didn’t rule out a further rate hike in September.
Meta posted strong revenue growth. The Facebook parent posted a rosy forecast showing that AI was helping Meta boost engagement and ad sales despite the uncertain economy.
Oil rose to a 3.5-month high. Supply concerns as Saudi Arabia and Russia cut oil production and promises of further stimulus in China boost WTI to almost $80.00 per barrel.
Microsoft slumped 4% post-earnings. The tech giant posted better-than-expected earnings and revenue. However, guidance fell short of estimates due to weakness in the PC business.
Barclays dropped 5% on profit squeeze. The British bank posted a 14% rise in revenues but warned that it expects lower net interest margins in its domestic arm. Bad loan provision rose to £900M.
Dow Jones posted its longest winning run since 1987. This US index posted 13 straight winning sessions at the time of writing, boosted by hopes that the Fed is nearing peak rates.
Snap dropped 17%. The social media platform plunged after a softer Q3 outlook. The company faces a slowing advertising market and daily active user growth.
Musk rebranded Twitter as X. Musk has changed the blue bird for an X logo and has updated Twitter’s homepage as well as mobile apps. The move has received mixed reviews.
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<h2>Chart of the Week</h2>
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24628" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/CHart-2-4.png" alt="" width="653" height="314" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/CHart-2-4.png 653w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/CHart-2-4-300×144.png 300w" sizes="(max-width: 653px) 100vw, 653px" />
Gold is on track to book its fourth straight weekly rise, boosted by hopes that the Federal Reserve is nearing the end of its aggressive hiking cycle.
Falling real yields could be a key driver for gold when the Federal Reserve starts to cut interest rates next year. The chart shows how, previously, when treasury yields have fallen, gold prices have rallied.
Gold is not worried about a hard or soft landing in the US, although a recession would also help drive safe-haven demand.
Analysts at JP Morgan consider that gold still has further to run, predicting that prices will rise over $2000 by the end of this year and rise to fresh record highs in 2024.
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<h2>5 Things to Watch This Week</h2>
1. BoE rate decision 
In the June meeting, the BoE raised interest rates by 50 basis points to 5%, a 15-year high. Since then, inflation cooled by more than expected to 7.9%, but this is still almost 4 times the BoE’s target. The central bank is expected to raise rates again on Thursday, 3rd August. However, after the cooler inflation print, the market is leaning towards a 25 bps hike over a 50 bps hike. The market is still pricing in a terminal rate of 6%. Will the BoE signal that this is too high?
2. RBA rate decision 
After Australia’s CPI print showed that inflation cooled by more than expected to 6% in Q2, down from a peak of 7.8% in Q4 2022 and core inflation eased to 5.9% from 6.6% in the previous quarter. The data shows that inflation is trending in the right direction, which could be enough for the RBA to pause rate hikes. However, the RBA will also be mindful that the labor market remains tight, with wages rising, keeping upward pressure on inflation. The RBA meeting will be a “live” meeting with the market favouring a pause, but only just.
3. Apple earning 
Apple is due to release Q3 earnings on Thursday, 3rd August, after the market close. While Apple’s numbers so far this year have been uninspiring, the share price has still managed to reach a record high and the market cap hit $3 trillion. Wall Street is expecting revenue to fall 1.8% to $81.5 billion amid soft demand for hardware. iPhones which make up around 50% of revenue, are expected to fall 2.2%. Adjusted EPS is set to rise just 0.2% to $1.20.
4. Amazon earnings 
Amazon is expected to post a jump in year-on-year profit and sales when it reports Q2 earnings after the market close on Thursday, 3rd August. Wall Street is expecting revenue of $131.54 billion, up 8% from a year earlier. EPS is expected to rise to $0.34c, up from a loss of $0.20 in Q2 2022. Buoying expectations ahead of the earnings report was a record-breaking Prime Day. Amazon Web Services, the real engine that drives profits, is expected to see 10% revenue growth.
5. Non-farm payroll 
On Friday, 4th August, the July non-farm payroll data will be released. In June, the number of jobs created fell to 209k; whilst still a solid number, this was the slowest pace of growth since December 2020; this was below the 225k forecast. Wage growth remained strong at 0.4%. The market will be watching closely to see if the trend of slower job creation continues. A larger slowdown in job creation could fuel recession fears.
Economic Calendar Highlights
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24631" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-3-1-1.png" alt="" width="738" height="423" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-3-1-1.png 738w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-3-1-1-300×172.png 300w" sizes="(max-width: 738px) 100vw, 738px" />
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24634" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-3-2-1.png" alt="" width="735" height="478" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-3-2-1.png 735w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Chart-3-2-1-300×195.png 300w" sizes="(max-width: 735px) 100vw, 735px" />
Source: FXStreet.com
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<h2>Technical Analysis:</h2>
TA of the major asset classes (Forex – Commodities – Indices…).
EUR/USD (Daily Candlestick Chart)
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24637" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/EURUSD_.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/EURUSD_.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/EURUSD_-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/EURUSD_-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/EURUSD_-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/EURUSD_-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/EURUSD_-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /> 
EUR/USD is in an uptrend, making higher highs and lows and above the 50 SMA. 
Price has now broken below and retested from underneath the 1.11 level with a large bearish engulfing candlestick (not closed) on the daily chart. 1.10 is immediate support, followed by 1.085.
GBP/USD (Daily Candlestick Chart)
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24640" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/GBPUSD_.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/GBPUSD_.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/GBPUSD_-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/GBPUSD_-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/GBPUSD_-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/GBPUSD_-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/GBPUSD_-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /> 
GBP/USD is in an uptrend, making higher lows and highs and above the 50 SMA. 
Price rebounded off the former resistance-turned-support at 1.283 but is rolling over after 2 up-days. 1.273 and then 1.258 are next supports. The bias is still overall higher but that would be negated by a close under 1.258.
USD/JPY (Daily Candlestick Chart)
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24643" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/USDJPY.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/USDJPY.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/USDJPY-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/USDJPY-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/USDJPY-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/USDJPY-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/USDJPY-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /> 
USD/JPY is a correction of an uptrend, making a lower low and below the 50 SMA. 
Price temporarily made it back over the 50 SMA but has since retraced and dropped back under. A test of resistance at 142.6 is possible before another bigger leg lower to follow through on the downside move from the peak at 145.
Gold (Daily Candlestick Chart)
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24646" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XAUUSD_.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XAUUSD_.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XAUUSD_-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XAUUSD_-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XAUUSD_-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XAUUSD_-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XAUUSD_-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /> 
XAU/USD is in an uptrend making higher highs and lows above the 50 SMA. 
The gold price has struggled to overcome resistance at 1980 and has made a lower high and lower low under the 50 SMA. The SMA must hold to stop a deeper pullback towards support around the 1900 round number near the June low.
Brent Oil (Daily Candlestick Chart)
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24649" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XBRENT_.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XBRENT_.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XBRENT_-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XBRENT_-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XBRENT_-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XBRENT_-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XBRENT_-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /> 
XBRENT is in an uptrend with higher highs and lows above the 50 SMA. 
The price rebounded cleanly off the former resistance-turned-support at 78.0 and has made a new higher high to extend the new uptrend. Resistance is at 84.5, then 87.6, with the recently broken high at 81.5 now support.
US500 (Daily Candlestick Chart)
<img decoding="async" loading="lazy" class="alignnone size-full wp-image-24652" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XUS500_.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XUS500_.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XUS500_-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XUS500_-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XUS500_-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XUS500_-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/XUS500_-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /> 
XUS500 is in an uptrend, making higher highs and lows above the 50 SMA. 
The low volatility uptrend in the price continues, now testing 4600. The small high at 4570 is near-term support, then 4510. Even with the overdue larger correction, the uptrend should remain intact while above the last swing low at 4370.
Thank you very much for reading – and have a great week trading!
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The Week Ahead 31st July – 4th August: will the BOE and the RBA join the Fed and the ECB?

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