The Week Ahead 3rd – 7th July: Will the US labour market continue to be so resilient?
<p>Welcome to Key to Markets preview of the Week Ahead.</p>
<h2>Currency Pair Performance</h2>
<p>5-day performance as of <strong>June 29, 2023. 10:00 GMT.</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23960 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart1.png" alt="" width="602" height="269" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart1.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart1-300×134.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></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>Persistent inflation was a key theme.</strong> Central bankers spoke about the strength of underlying inflation and how they are adopting policies for that.</p>
<p><strong>US-China chip war reports.</strong> Nvidia and other chip stocks fell after a report in the Wall Street Journal that the White House was considering restricting the export of<br />
AI chips to China.</p>
<p><strong>Canada’s inflation slows to an almost 2-year low.</strong> Consumer prices cooled to 3.4% in May, down from 4.4%. Swaps imply that there is still a 50/50 chance of another rate hike in July.</p>
<p><strong>GBP/JPY rose to a 7-year high.</strong> Divergent central bank comments from the ECB central banking forum sent the pair above 183 to a level last seen in January 2016.</p>
<p><strong>Aston Martin signed a deal with Lucid.</strong> The luxury car maker partnered with EV maker Lucid to bring a new EV SUV to the market in 2025.</p>
<p><strong>Gold fell to a 3-month low.</strong> The precious metal fell to $1902, its lowest level since mid-March, after hawkish comments from Federal Reserve Chair Powell and ECB President Lagarde.</p>
<p><strong>Premier Li Qiang forecast 5% growth in China.</strong> The Chinese premier said that his country was still on track to grow by around 5% and is expecting stronger growth in the second half.</p>
<p><strong>US banks passed the stress test.</strong> All 23 banks survived the Fed’s stress test as the results show strength in the sector in light of the recent crisis.</p>
<p><strong>Carnival rose 8% this week after earnings.</strong> The cruise operator stock posted a narrower-than-expected fiscal Q2 loss, and revenue more than doubled to a Q2 record as demand ramps up.</p>
<p><strong>Wagner’s rebellion failed.</strong> The mutiny in Russia was aborted but raised questions over the strength of President Putin’s leadership.</p>
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<h2>Chart of the Week</h2>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23963 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart-2-5.png" alt="" width="602" height="309" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart-2-5.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart-2-5-300×154.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>Source: Bloomberg</p>
<p>The Nasdaq is on the brink of its best H1 performance ever.</p>
<p>The Nasdaq is set to rise around 36% across the first half of the year, erasing a 33% slump last year. This compares to a 14% rise in the S&P 500 and a 2% gain in the Dow Jones.</p>
<p>Hopes that the Fed could be approaching the end of its hiking cycle, coupled with the AI frenzy, have helped the tech-heavy index outperform.</p>
<p>While a strong H1 is usually a good sign for the rest of the year, the rally in tech looks overblown with rich valuations for stocks including Apple, Nvidia, and Microsoft.</p>
<p>Strategists are saying that the rally needs to broaden its base if it wants to extend further. There could be tentative signs that last year’s big losers, such as consumer discretionary, are rebounding, which could help boost confidence.</p>
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<h2>5 Things to Watch This Week</h2>
<p><strong>1. US non-farm payrolls</strong><br />
The US jobs market has proved to be very resilient, smashing in May with 339k jibs added, against 190k forecast, but the unemployment rate ticked higher to 3.7% and average earnings came in slightly below expectations. In June, expectations are for 200k jobs to be added for unemployment to hold steady. An increase in average earnings could raise concerns over higher inflation for longer.</p>
<p><strong>2. RBA rate decision</strong><br />
The RBA caught the market by surprise in June, hiking interest rates by 25 basis points after pausing hikes for 4 months. The minutes of the RBA meeting showed that the decision was finely balanced. This means that the drop in May inflation to 5.6% should be enough to keep interest rates unchanged in the July meeting.</p>
<p><strong>3. Eurozone retail sales</strong><br />
Eurozone retail sales will be released on Thursday 6th, July, and are expected to MoM in April after coming in flat at 0% in April against the 0.2% expected. Weak sales come as inflation remains high and interest rates continue to rise, squeezing household income. With ECB Christine Lagarde saying that the central bank isn’t done hiking rates, additional strain could be put on spending in the coming months.</p>
<p><strong>4. OPEC meeting</strong><br />
The oil cartel will discuss oil output on July 5th and 6th. The meeting comes as oil prices have risen just 1.5% after the previous meeting in Vienna, where the group surprised the market with a voluntary output cut from Saudi Arabia. No changes to output are expected in July. This will be the second straight meeting with restricted media coverage.</p>
<p><strong>5. FOMC minutes</strong><br />
Given that Federal Reserve Chair Jerome Powell has spoken several times, the June Fed meeting minutes could be considered a little stale. Still investors will scrutinise the minutes for further insight as to why the Fed paused its rate hiking cycle and where interest rates could go from here. The Fed indicated two more rate hikes are to come this year. This market is still only pricing in an 80% probability of one more hike and that being in the July meeting.</p>
<p><strong>Economic Calendar Highlights</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23966 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart-3-5.png" alt="" width="602" height="396" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart-3-5.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Chart-3-5-300×197.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>Source: FXStreet.com</p>
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<h2 role="presentation">Technical Analysis:</h2>
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<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-23969 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/EURUSD-6.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/EURUSD-6.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/EURUSD-6-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/EURUSD-6-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/EURUSD-6-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/EURUSD-6-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/EURUSD-6-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>EUR/USD is in an uptrend, making higher lows and highs and above the 50 SMA.<br />
The situation is little changed from last week, with the pair trading in a range under the 1.10 round figure. A fakeout below 1.09 was bought up off the lows and has so far not seen any follow-through.</p>
<p><strong>GBP/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23972 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/GBPUSD-6.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/GBPUSD-6.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/GBPUSD-6-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/GBPUSD-6-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/GBPUSD-6-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/GBPUSD-6-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/GBPUSD-6-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>GBP/USD is in an uptrend, making higher lows and highs and above the 50 SMA.<br />
The price has pulled back to resistance-turned-support at 1.265. Next support can be found at the 50 SMA, then 1.245.</p>
<p><strong>USD/JPY (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23975 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/USDJPY-6.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/USDJPY-6.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/USDJPY-6-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/USDJPY-6-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/USDJPY-6-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/USDJPY-6-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/USDJPY-6-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>USD/JPY is in an uptrend, making higher highs, lows, and above the 50 SMA.<br />
Dollar-yen continues to trend strongly higher with few down-days. The latest up-move has taken it just shy of the big 145 round number, which could prompt selling by longer-term players.</p>
<p><strong>Gold (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23978 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XAUUSD-6.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XAUUSD-6.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XAUUSD-6-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XAUUSD-6-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XAUUSD-6-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XAUUSD-6-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XAUUSD-6-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XAU/USD is in a sideways trend but below the 50 SMA.<br />
There was a successful retest of the broken support at 1930 as resistance, suggesting further downside with 1900 the next barrier to cross before support further down at 1856. A break back over 1930 would negate the bearish bias.</p>
<p><strong>Brent Oil (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23984 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XBRENT-6.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XBRENT-6.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XBRENT-6-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XBRENT-6-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XBRENT-6-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XBRENT-6-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XBRENT-6-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XBRENT is in a sideways trend but below the 50 SMA.<br />
Price has again rebounded off the 72 level. The 50 SMA continues to offer resistance, while 72 is major support. RSI is not reaching extremes, which is indicative of a sideways trend.</p>
<p><strong>US500 (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23987 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XUS500-6.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XUS500-6.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XUS500-6-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XUS500-6-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XUS500-6-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XUS500-6-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/XUS500-6-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XUS500 is in an uptrend, making higher highs and lows above the 50 SMA.<br />
A bullish engulfing candlestick saw some follow-through with a higher-low forming a new fractal. The resumption of the uptrend would be confirmed by RSI re-entering overbought territory over 65.</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-3rd-july-7th-july-will-the-us-labour-market-continue-to-be-so-resilient-23959/">The Week Ahead 3rd – 7th July: Will the US labour market continue to be so resilient?</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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