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Weekly Market Analysis 26th August 2024
BY Janne Muta
|August 26, 2024This week is expected to be relatively quiet, reflecting the late August lull, but it still holds key events that could influence markets. Monday is void of major news events, giving traders time to research and prepare for the upcoming data releases.
On Tuesday, the focus will be on the US Consumer Confidence Index, with analysts forecasting a slight decline to 100.2 from the previous 100.3. Although the change is minor, consumer sentiment can significantly influence market perceptions about economic stability and future spending, which could affect the USD.
Wednesday brings the Australian year-over-year CPI data. Expectations are for inflation to cool to 3.4%, down from 3.8%. A higher-than-expected figure could reignite concerns about persistent inflation, potentially supporting the AUD, while a lower figure might ease these concerns, leading to a weaker AUD.
Thursday is pivotal, with the German Preliminary CPI expected to remain stable at 0.3% month-over-month. Stability here would confirm that inflation remains anchored, but any surprises could stir the EUR. The US will also release its Preliminary GDP quarter-over-quarter data, forecasted to remain steady at 2.8%. Additionally, weekly Unemployment Claims are anticipated to edge up slightly to 234K from the previous 232K. While these increases are minor, they may signal a slight softening in the US labour market, impacting USD sentiment.
Friday wraps up the week with several important releases. The Eurozone’s CPI Flash Estimate year-over-year is expected to decrease to 2.2% from 2.6%, reflecting a continued easing in inflationary pressures. Meanwhile, Canada’s GDP month-over-month is forecasted to slow to 0.1% from the previous 0.2%, and the US Core PCE Price Index month-over-month is expected to hold steady at 0.2%. These figures are crucial for gauging economic health and monetary policy direction in their respective regions.
The week concludes with Fed Chair Powell's speech at the Jackson Hole Symposium, an event that often sets the tone for future Fed policy. Traders should be alert to any hints regarding interest rates or economic outlook that could influence market movements.
Overall, this week’s data releases, particularly inflation figures and consumer confidence, will provide valuable insights into the economic outlook for the US, Europe, and Australia. Any deviations from expectations could lead to significant market reactions.
Here are 3 markets to watch this week:
USDCAD
The US dollar was heavily sold on Friday after Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium, which exceeded expectations by clearly signalling upcoming rate cuts. This move surprised many who had anticipated a more cautious approach. Powell emphasised the Fed's commitment to supporting a strong labour market, indicating that it was time to adjust policy. Notably, he avoided any references to gradual cuts, keeping his options open for a potential 50 basis point reduction either now or later. This dovish tone sent the dollar lower against major counterparts and drove oil prices significantly higher, further supporting the Canadian dollar against the USD.
As a result, USDCAD lost over 0.8% in Friday's trading before steadying around the 1.3500 level. After the sharp move lower, there is now a key resistance area around the 1.3571 level, while the nearest key support is at 1.3477. Intraday traders might target this level if there is a break below 1.3500. The loss of momentum in the late US session and in the Asian session today suggests profit-taking after the strong move. However, Powell’s unexpectedly dovish comments may continue to weigh on the USD, meaning any potential rallies could be short-lived.
SILVER
Silver is another market benefiting from dollar weakness. In the hourly chart silver is trading in a bullish trend channel, breaking resistance levels and creating higher lows. The latest 1h higher reactionary low was established at 29.66, a level that coincides with the 20-period SMA. This is clearly a key support level should there be any retracements lower in the market. Another key level to focus on is the recently penetrated swing high at 29.92 (now support), with the nearest key resistance at 30.39.
Moving average-based technical analysis indicates a strong trend in silver, with the 20-period SMA positioned above the 50-period SMA and the market trading above the upward-pointing 20-period SMA. The stochastic oscillator is in the overbought area, but this is common in uptrends, thereby reducing its predictive value.
USOIL
Last week, US oil rallied strongly, gaining momentum from a weak US dollar. The market surged by almost 2.8% on Friday, reflecting the bullish sentiment sparked by Fed Chair Powell's comments. This upward movement has resulted in a bullish rejection candle on the weekly timeframe, signalling potential for further gains as the market seeks to attract new buying above its recent high.
The hourly chart reinforces the bullish outlook, showing a strong uptrend characterised by a series of higher lows and higher highs. The nearest support level to monitor is 74.96. Should the market hold above this level, a move towards 76 is likely. Alternatively, a break below 74.96 could lead to a decline towards 74.30.
Supporting this bullish trend, the 20-period and 50-period moving averages are both pointing higher, with the market trading above the faster-moving average. This suggests the trend remains robust. However, it’s important to remember that markets can experience significant retracements, so proper market timing and risk management strategies are essential.
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.
Time (GMT +3)
Tuesday August 27th
| Time | Currency | Event |
| 5:00 PM | USD | CB Consumer Confidence |
Wednesday August 28th
| Time | Currency | Event |
| 4:30 AM | AUD | CPI y/y |
Thursday August 29th
| Time | Currency | Event |
| All Day | EUR | German Prelim CPI m/m |
| 3:30 PM | USD | Prelim GDP q/q |
| USD | Unemployment Claims |
Friday August 30th
| Time | Currency | Event |
| 12:00 PM | EUR | CPI Flash Estimate y/y |
| 3:30 PM | CAD | GDP m/m |
| USD | 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.
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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.
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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