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Analysis

This weeks key events: 3 Markets to watch this week 27-05-2024

BY Janne Muta

|May 27, 2024

The Conference Board's Consumer Confidence Index on Tuesday is expected to dip slightly to 96.1 from 97, reflecting the easing inflation. The annual headline CPI was recently reported to tick down by 0.1% to 3.4%. At the same time, high interest rates (higher borrowing costs) impact spending. The labour market shows some signs of cooling, with only 175,000 new jobs created in April, contributing to consumer concerns about job security.

The Services PMI fell below 50 to 49.4, indicating a contraction in the service sector, which significantly influences consumer spending. Retail sales have also plateaued, indicating cooling demand. However, despite these concerns, the revised University of Michigan consumer sentiment exceeded expectations last week, suggesting some consumers remain optimistic.

Other data reported this week include Australian headline inflation and the German CPI on Wednesday. Australia reports CPI inflation rate with the analyst consensus projecting an easing 0.1% to 3.4%. A strong deviation from the expected number could create added volatility and trading opportunities.

Germany, the biggest economy in the EU is expected to report cooling in its monthly CPI inflation. Analyst consensus predicts the inflation rate to drop to 0.2% from 0.5%. EUR and Dax traders should follow the releases and the subsequent price action closely to see if trading opportunities arise.

US Preliminary GDP q/q on Thursday is forecasted to show an increase of 1.3%, down 0.3% from the prior rate (1.6% prior). Despite recent declines in inflation, higher interest rates persist. This impacts borrowing costs for consumers and businesses, leading to slower investment and spending.

On Friday the Bureau of Economic Analysis reports on the Fed’s favourite inflation gauge, the Core PCE. The monthly is expected to come in at: 0.2%, 0.3% prior. Analyst consensus expected a slightly lower reading due to inflationary pressures easing lately. According to Vanguard core inflation remains elevated but there are indications of a potential slowdown as supply chain disruptions ease and commodity prices stabilize. Retail sales volumes have also plateaued, indicating a cooling demand which can contribute to lower inflation​.

Canadian economic growth is expected to slow down by 0.2% to 0.0% from a month before. However, this release takes place at the same time as the US Core PCE report which is the main focus of the USDCAD traders.

EURUSD

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EURUSD has resumed the up trend after it attracted institutional buying near the 1.0800 - 1.0868 confluence area. This is where the SMA(50) and a market structure level are closely aligned. The market remains bullish above this level and could be soon retesting the 1.0885 resistance level. Below the confluence area a move to 1.0790 could be likely. The 4h chart shows EURUSD bouncing higher from 1.0842 and breaking higher but the next resistance level at 1.0863 is relatively close and could slow the market down today (note that it coincides with the 61.8% retracement level) as both the US and UK are observing market holidays.

AUDUSD

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AUDUSD has broken out of a bullish trend channel and is once again trying to move higher. The market has however created a resistance area at 0.6646 – 0.6656 with the SMA(20) inside this range. The area is a key for the market moves this week. If the bulls can push above it and attract more buying above 0.6656 AUDUSD could soon test the 0.6685 resistance level. Alternatively, a failure to penetrate the confluence area would increase the probability of the market trading down to 0.6579 or so. Note that the moving averages (50 and 20 periods) indicate lack of momentum with the SMA(20) converging towards the slower SMA.

USDCAD

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USDCAD tried to break out of a bearish trend channel but sellers pushed it back below the channel top. This means we now have a key resistance level at 1.3743 and the market could be trading toward the recent swing lows at the 1.3591 – 1.3615 range. Alternatively, if the market attracts buyers and creates a new swing low above this range, look for a move to levels near the 1.3743 resistance level. Note that the price of oil has been stabilising which could bolster the CAD bulls.

This weeks high impact market events

The following economic events and data releases have the potential to cause considerable price movements, thereby offering you both opportunities and risks. Stay informed and leverage our economic calendar to access real-time data and analysis as these key events unfold.

All times are GMT+3

Monday May 27th

Time
3:05 AM
Currency
JPY
Impact
High
Event
BOJ Gov Ueda Speaks

Tuesday May 28th

Time
5:00 PM
Currency
USD
Impact
High
Event
CB Consumer Confidence

Wednesday May 29th

Time
4:30 AM
All Day
Currency
AUD
EUR
Impact
High
High
Event
CPI y/y
German Prelim CPI m/m

Thursday May 30th

Time
3:30 PM
5:00 PM
Currency
USD
USD
USD
Impact
High
High
High
Event
Prelim GDP q/q
Unemployment Claims
Pending Home Sales m/m

Friday May 31st

Time
3:30 PM
Currency
CAD
USD
Impact
High
High
Event
GDP m/m
Core PCE Price Index m/m

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While research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.

TIO Markets UK Limited is a company registered in England and Wales under company number 06592025 and is authorised and regulated by the Financial Conduct Authority FRN: 488900

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.

DISCLAIMER: TIO Markets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.


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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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