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• Errante’s The Week Ahead: 15th – 19th July 2024 

Errante’s The Week Ahead: 15th – 19th July 2024 

Errante’s The Week Ahead: 15^th – 19^th July 2024 

Highlights of the Week: 

• ECB Meeting: Key decisions and statements from the European Central Bank. 

• Powell Speech: Fed Chair Powell speaks on Monday, providing insights into US monetary policy. 

• Inflation Data: Crucial CPI releases from Canada, New Zealand, the UK, and the Eurozone. 

• Economic Indicators: Important US reports, including Core Retail Sales, Empire State Manufacturing Index, and Unemployment Claims. 

Welcome to another insightful edition of the Errante Weekly Newsletter. 

Now What? 

As we head into the week of July 15 – July 19, 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 EUR, GBP, CAD, and USD, with key data releases and central bank activities providing critical insights. 

Powell’s Speech 

On Monday, Fed Chair Powell will deliver a speech, providing insights into the Federal Reserve’s outlook on the US economy and potential monetary policy adjustments. So far, Powell’s comments last week suggest a shift towards more accommodative monetary policy soon, aiming to balance economic growth with inflation control. In summary, the Federal Reserve’s dovish tone and anticipated rate cuts in September 2024 have led to a decline in bond yields and increased market optimism for economic stability and growth. 

Focus on ECB Meeting 

The most anticipated event this week is the European Central Bank (ECB) meeting on Thursday. The ECB is anticipated to discuss further interest rate adjustments, following the recent 25 basis points cut in June. While another rate cut is possible, ECB President Christine Lagarde has emphasized a data-dependent approach, suggesting that future decisions will be based on incoming economic data and inflation trends. The ECB has revised its inflation projections upwards, now expecting headline inflation to average 2.5% in 2024 and 2.2% in 2025. Core inflation, which excludes volatile items like energy and food, is projected at 2.8% for this year. These revisions indicate ongoing concerns about inflationary pressures despite recent moderation​. 

Impact of ECB Meeting 

The ECB’s decisions will be pivotal in shaping market expectations. With the current rate at 4.25%, any dovish signals from the ECB could weaken the Euro and impact EUR pairs in short term. Here are key points to watch: 

• Inflation and Growth Data: Any new economic data, particularly related to inflation and GDP growth, will be crucial in shaping the ECB’s policy decisions. On Wednesday, the Eurozone CPI is set to be released at 12:00 GMT+3, with an expected decline from 2.6% to 2.5%. This data will be critical in assessing the inflationary pressures within the Eurozone and could significantly influence the ECB’s policy stance. 

• Monetary Policy Statement: The language used in the ECB’s statement will be closely scrutinized for hints about the future direction of monetary policy. 

• Press Conference Insights: Comments from Christine Lagarde during the post-meeting press conference will provide further insights into the ECB’s assessment of economic conditions and their policy outlook. 

Market Events and Announcements 

The times below are GMT +3. 

Monday, July 15, 2024: 

• 3:30 PM – USD Empire State Manufacturing Index: A monthly survey of manufacturers in New York State that indicates economic health based on new orders, shipments, employment, and inventories. 

• 7:00 PM – USD Fed Chair Powell Speaks: Fed Chair Jerome Powell’s testimony can provide insights into the Federal Reserve’s economic outlook and monetary policy stance. 

Tuesday, July 16, 2024: 

• 3:30 PM – CAD CPI m/m: Measures the change in the price of goods and services from the perspective of the consumer. 

• 3:30 PM – CAD Median CPI y/y: An indicator of inflation that excludes the most volatile items. 

• 3:30 PM – CAD Trimmed CPI y/y: Measures core inflation, excluding the most extreme price changes. 

• 3:30 PM – USD Core Retail Sales m/m: Measures the change in the total value of sales at the retail level, excluding automobiles. 

• 3:30 PM – USD Retail Sales m/m: Measures the change in the total value of sales at the retail level. 

Wednesday, July 17, 2024: 

• 1:45 AM – NZD CPI q/q: Measures the change in the price of goods and services purchased by consumers. 

• 9:00 AM – GBP CPI y/y: Measures the change in the price of goods and services purchased by consumers. 

• 12:00 PM – EUR CPI y/y: Measures the change in the price of goods and services purchased by consumers, with an expected decrease from 2.6% to 2.5%. 

Thursday, July 18, 2024: 

• 4:30 AM – AUD Employment Change: Measures the change in the number of employed people. 

• 4:30 AM – AUD Unemployment Rate: Measures the percentage of the total workforce that is unemployed and actively seeking employment. 

• 9:00 AM – GBP Claimant Count Change: Measures the change in the number of people claiming unemployment-related benefits. 

• 3:15 PM – EUR Main Refinancing Rate: The interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system. 

• 3:15 PM – EUR Monetary Policy Statement: Provides insights into the ECB’s monetary policy decisions. 

• 3:30 PM – USD Unemployment Claims: Measures the number of individuals who filed for unemployment insurance for the first time during the past week. 

• 3:45 PM – EUR ECB Press Conference: ECB President Lagarde’s comments can provide insights into the ECB’s outlook and policy stance. 

Friday, July 19, 2024: 

• 9:00 AM – GBP Retail Sales m/m: Measures the change in the total value of sales at the retail level. 

• 3:30 PM – CAD Core Retail Sales m/m: Measures the change in the total value of sales at the retail level, excluding automobiles. 

• 3:30 PM – CAD Retail Sales m/m: Measures the change in the total value of sales at the retail level. 

Market Insights: Key Charts to Watch 

EUR/GBP Weekly Chart: 

Last week, EUR/GBP started with a bearish gap, reflecting intensified downward pressure. The pair is expected to remain bearish below the 100 and 34 moving averages, targeting the key support at 0.83971. Should sellers prevail, they might push towards 0.83695, 0.83280, and 0.82957. 

Impact of Upcoming Events: 

• UK CPI and Eurozone CPI (Wednesday): If the UK CPI shows higher inflation than expected, it could strengthen the GBP, further pushing EUR/GBP down. Conversely, a dovish ECB meeting could also add to the bearish sentiment for this pair. 

• ECB Meeting: Dovish tones from the ECB could pressure EUR/GBP lower, reinforcing the bearish outlook unless the pair breaks above the 0.84985 resistance. 

Key Levels: 

Support: 0.83971, 0.83695, 0.83280, 0.82957 

Resistance: 0.84358, 0.84985 

US 10-Year Treasury Yield on Weekly Chart: 

The yield on the 10-year US Treasury bond has fallen to the previous low of 4.190%, aligning with the 100-week moving average, due to lower-than-expected inflation data. The yield could see support at this level, but if it breaks, it may drop to 4.065% or even 4.003%. 

On the other hand, reduced demand for bonds could push the yield towards the resistance at 4.313% and the broken trendline resistance at 4.493%. 

Impact of Upcoming Events: 

• Powell’s Speech: With inflation moderating, the Fed might adopt a less aggressive policy stance, reducing rate hike pressures and thus lowering yields. 

• Global Economic Dynamics: Slower growth in Europe and other regions may make U.S. Treasuries more attractive, supporting higher demand and lower yields. 

• Market Sentiment: Investor sentiment remains cautious, with a preference for safer assets like U.S. Treasuries, which further supports lower yields. 

Key Levels: 

Support: 4.190%, 4.065%, 4.003% 

Resistance: 4.313%, 4.493% 

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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