The Week Ahead 7th – 11th August: Will the US CPI continue to decline?
<p>Welcome to Key to Markets preview of the Week Ahead.</p>
<h2>Currency Pair Performance</h2>
<p>5-day performance as of <strong>August 3, 2023. 16:00 GMT.</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24777 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-1.png" alt="" width="737" height="331" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-1.png 737w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-1-300×135.png 300w" sizes="(max-width: 737px) 100vw, 737px" /></p>
<p>Source: finviz.com</p>
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<h2>10 Big Stories Last Week</h2>
<p>In case you missed it…</p>
<p><strong>Fitch downgraded the US credit rating</strong> from AAA to AA+, citing “expected fiscal deterioration.”</p>
<p><strong>King Dollar.</strong> A flight to safety after the US downgrade ironically saw investors flood into dollars.</p>
<p><strong>BOE hiked interest rates</strong> by a quarter-point (25 bps) – the 14th in a row – in a split vote.</p>
<p><strong>RBA extends the pause.</strong> The RBA held rates steady for a 2nd time to assess incoming data.</p>
<p><strong>The eurozone returned to growth</strong> as GDP expanded by 0.3% in the second quarter.</p>
<p><strong>AUDUSD was the top faller</strong> of the week among major currencies after the latest move by the RBA</p>
<p><strong>Dow misses record.</strong> The index narrowly missed a record 14th consecutive daily rise.</p>
<p><strong>S&P 500 rose for a 5th month</strong> returning 3.1% across July as stock market sentiment improved.</p>
<p><strong>GBPUSD rolled over</strong> after the BOE decision on speculation the central bank is nearly done hiking.</p>
<p><strong>Gold softens.</strong> Strength in the USD weighed on gold which got faded below the big $2000 level.</p>
<p><strong>Nintendo (NTDOY)</strong> reported a 50% jump in annual profits after the Mario Brothers Movie.</p>
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<h2>Chart of the Week</h2>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24780 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-2.png" alt="" width="602" height="400" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-2.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-2-300×199.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>Source: Lisa Abramowicz</p>
<p>It’s not the kind of bullish chart you want to see!</p>
<p>The value of US interest payments has surged 50%.</p>
<p>It now stands at nearly $1 trillion – which seems increasingly difficult to service – especially if there is a recession.</p>
<p>It’s happening to many people (consumers) too. Imagine if your mortgage goes up by a half, and then your hours get cut at work, or you lose your job. The US economy risks the same on a macro level.</p>
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<h2>5 Things to Watch This Week</h2>
<p><strong>1. US CPI</strong><br />
Having dropped all the way back to 3.0% in June, another monthly decline is expected in July, cementing the decision of the Federal Reserve to pause its series of rate hikes, possibly permanently. The softer inflation remains bearish for the USD, likely only changing if it becomes clear that inflation is turning to deflation and a recession.</p>
<p><strong>2. UK Q2 GDP</strong><br />
Comparisons will be made with the Eurozone, which topped expectations to report quarterly growth of 0.3% last week. Like the UK, the Eurozone contracted in the first quarter. It remains to be seen if the UK will enter a technical recession with another quarterly decline in Q2. It puts the UK in the unenvious position of high inflation and no growth – probably a bearish scenario for the GBP.</p>
<p><strong>3. China inflation (CPI + PPI)</strong><br />
Chinese consumer prices were utterly flat (0%) in June, while producer prices remained stubbornly in the red at -5.4%. These figures don’t translate directly to any forex market – maybe AUD/USD – if there is something shocking – but do speak to weakness in the 2nd largest economy, which is negative for broader markets.</p>
<p><strong>4. Disney’s earnings</strong><br />
After most of the big tech giants, including Apple and Amazon, concluded their reporting last week, some big names remain to report. Disney stock (DIS) has underperformed this year, falling -1.5% as other Dow constituents like Apple hit a record high.</p>
<p><strong>5. Alibaba’s earnings</strong><br />
Alibaba earnings are particularly interesting in the light of a likely reboot of its spin-off Ant Group – also founded by Jack Ma. Beijing appears to have ended its crackdown on the country’s tech giants, leaving room for the stocks to recover if earnings justify it.</p>
<p><strong>Economic Calendar Highlights</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24783 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-3.png" alt="" width="752" height="351" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-3.png 752w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-3-300×140.png 300w" sizes="(max-width: 752px) 100vw, 752px" /></p>
<p>Source: FXStreet.com</p>
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<h2>Technical Analysis:</h2>
<p>TA of the major asset classes (Forex – Commodities – Indices…).</p>
<p><strong>EUR/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24786 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/eurusd-9.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/eurusd-9.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/eurusd-9-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/eurusd-9-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/eurusd-9-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/eurusd-9-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/eurusd-9-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>EUR/USD is in a weak uptrend, making one lower high and one lower low while above the 50 SMA.<br />
Price has extended the selloff since the bearish engulfing candle mentioned last week but has so far found support at the 50 SMA. A break below 1.09, then the June lows, would suggest the uptrend has reversed.</p>
<p><strong>GBP/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24789 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/gbpusd-9.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/gbpusd-9.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/gbpusd-9-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/gbpusd-9-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/gbpusd-9-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/gbpusd-9-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/gbpusd-9-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>GBP/USD is in a weak uptrend, making one lower high and one lower low while above the 50 SMA.<br />
Price was weakened further, dropping under the 50 SMA but forming a bullish hammer pattern (not closed) after testing the previous major low around 1.26. The price needs to hold current levels or risk a bearish trend change.</p>
<p><strong>USD/JPY (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24792 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/usdjpy-9.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/usdjpy-9.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/usdjpy-9-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/usdjpy-9-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/usdjpy-9-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/usdjpy-9-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/usdjpy-9-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>USD/JPY is in an uptrend making higher highs and lows above the 50 SMA.<br />
Price has now made a new higher high and higher low and is back over the 50 SMA, indicating bullish sentiment. However, this could be the last gasp for bulls if bears re-enter the market before the peak at 145.</p>
<p><strong>Gold (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24795 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xauusd-9.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xauusd-9.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xauusd-9-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xauusd-9-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xauusd-9-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xauusd-9-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xauusd-9-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XAU/USD is in a sideways trend<br />
The gold price has drifted lower in low-volatility trading after it struggled to overcome resistance at 1980 and has made a lower high and lower low under the 50 SMA.</p>
<p><strong>Brent Oil (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24798 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xbrent-9.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xbrent-9.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xbrent-9-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xbrent-9-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xbrent-9-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xbrent-9-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xbrent-9-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XBRENT is in an uptrend with higher highs and lows above the 50 SMA.<br />
A bearish engulfing pattern suggests some caution returning to the market after a sustained rally. However, the price action nowhere near confirms a reversal yet, and the bias remains bullish up to major resistance at 87.</p>
<p><strong>US500 (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24801 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xus500-9.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xus500-9.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xus500-9-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xus500-9-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xus500-9-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xus500-9-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/xus500-9-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XUS500 is in an uptrend, making higher highs but with one lower low above the 50 SMA.<br />
The index is correcting again after touching 4600 and has now formed one lower low. 4470, the two matching highs now become support with the trend still intact while above the 50 SMA currently near 4400.</p>
<p>Thank you very much for reading – and have a great week trading!</p>
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<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/the-week-ahead-7th-11th-august-will-the-us-cpi-continue-to-decline-24776/">The Week Ahead 7th – 11th August: Will the US CPI continue to decline?</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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