Weekly Market Analysis for 16th September 2024

This week is set to bring a wave of significant economic events and data releases, creating ample trading opportunities for both intraday and swing traders. While Monday lacks major economic events, the rest of the week promises to be dynamic and potentially volatile.

On Tuesday, the spotlight will be on Canada with the release of key inflation data. The CPI month-over-month is expected to show a slight decrease to 0.1% from the previous 0.4%. Similarly, the Median CPI year-over-year is forecasted to dip to 2.3% from 2.4%. Any deviations from these expectations could lead to notable movements in the CAD, particularly if the data suggests a shift in inflationary pressures. Later in the day, the US will release Core Retail Sales and Retail Sales figures, both anticipated to come in lower than their previous readings, which might put pressure on the USD.

Wednesday will be dominated by the UK and US. The UK will release its CPI year-over-year data, expected to remain steady at 2.2%. Traders should watch for any surprises that could influence GBP movements. The US will later announce the Federal Funds Rate, which is forecast to drop from 5.5% to 5.25%. The FOMC's economic projections, statement, and press conference will be critical as market participants seek clues about future monetary policy direction.

Thursday’s attention will turn to New Zealand, where the GDP quarter-over-quarter is forecasted to decline by 0.4%, a sharp drop from the previous 0.2% increase. This could weigh heavily on the NZD if realised. Australia will also release its Employment Change and Unemployment Rate figures. The Employment Change is expected to rise by 25.8K, slightly down from the previous 58.2K, with the Unemployment Rate forecasted to stay at 4.2%. Stronger-than-expected employment data could provide support for the AUD.

On Friday, Japan will take centre stage with tentative releases of the BOJ Policy Rate, Monetary Policy Statement, and Press Conference. The policy rate is expected to remain at <0.25%. Traders should monitor the BOJ's statement closely for any indications of changes in monetary policy, which could influence JPY movements. The UK and Canada will also release Retail Sales data, with the UK expecting a slight decrease to 0.4% from 0.5% month-over-month, and Canada forecasted to see mixed results in its Core Retail Sales figures.

Overall, this week offers multiple high-impact data releases that could shape market trends across several major currencies. Traders should remain vigilant and prepared for potential shifts in market sentiment as the week unfolds.

Here are 3 markets to watch this week

USDCAD

After rallying for two weeks, USDCAD lost momentum at 1.3618. Since then, the market has moved sideways between the 23.6% Fibonacci retracement level at 1.3564 and a resistance level at 1.3618. This resistance level is closely aligned with a level that has acted as a key psychological barrier on several occasions over the last two years.

Now that the market has created a candle indicating a loss of momentum on the weekly chart just below this level, we could see the range resolved to the downside. So, if there is a decisive break below 1.3564, the market could trade down to 1.3510. Alternatively, should there be a break above 1.3618 followed by continued buying, USDCAD might trade up to the 50% Fibonacci retracement level at 1.3693.

FTSE 100

Recently, the FTSE 100 index has been attracting buyers, as evident from the market creating higher lows on the daily and 8-hour charts. This is building pressure against a resistance area between 8,284.7 and 8,300. The market has tested this area several times, potentially weakening it while simultaneously forming higher reactionary lows. This suggests that buyers are gaining confidence and are willing to pay higher prices after each dip. However, these are only indications, and the most crucial factor is the market’s potential ability to break above the resistance area. If the market is too weak to overcome this level, the risk of downside movement increases substantially.

Note also that the market created a lower reactionary high on the weekly chart three weeks ago. This indicates that the risk of downside movement remains. If the momentum building fails and there is no break above the resistance area, we could see the market trading down to 8,167. Conversely, if the market breaks above the resistance, it could pave the way to the next market structure level at 8,355.

AUDUSD

AUDUSD has been trending lower on the daily chart in September. However, the market is now breaking above the bearish price channel on the daily chart, with a breakout already occurring on the 8-hour chart. If there is follow-through buying above Friday's high, we could see the market trading up to 0.6760. This price level is near an area that acted as resistance on 21st August and then, after being breached, served as support on several occasions a few days later. Therefore, if the bullish move on the 8-hour chart continues, there is a risk of supply entering the market around the 0.6760 level. Alternatively, if the momentum fails, the market could trade down to 0.6692, and if this level doesn't hold, potentially down to 0.6622.

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

Tuesday, 17th September

Wednesday, 18th September

Thursday, 19th September

Friday, 20th September

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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

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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