Weekly Market Outlook BOE, RBA & NFPs in focus
The week starts with the Reserve Bank of Australia (RBA) Rate Statement in the early hours of Tuesday morning. It’s likely to be a market mover considering most of Australia are back in lockdown, vaccine uptake has been very and the fact that the Australian dollar has been the weakness currency in the past few weeks.
On Thursday, all eyes will be on the Bank of England Monetary Policy Report and interest rate decision. The British pound has been one of the strongest currencies in recent weeks as the easing of lockdown restrictions coincided with a drop in coronavirus cases. Markets are now preparing for the bank to increase rates sooner than later.
The US Non-Farm Payroll report is on Friday afternoon. Last week the US dollar broke out to the downside from its recent range. The Delta variant is running rampant across the States which may also pressure the US dollar lower.
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Weekly Forex Calendar
Source: Forex Calendar from the MetaTrader 5 trading platform provided by Admirals.
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Trader’s Radar – BOE Monetary Policy Report
At 12.00 pm BST Thursday 6 August, the Bank of England releases its latest Monetary Policy Report and interest rate decision. Some of the central bank’s Monetary Policy Committee have already signalled they want to start withdrawing stimulus.
The UK has one of the highest vaccination rates in the world and has recently eased lockdown restrictions. At the same time, coronavirus case rates have dropped suggesting a strong economic recovery could be ahead. It’s likely the BOE will be one of the first to increase interest rates.
However, the withdrawal of stimulus is not shared by other members so it will be interesting to see the bank’s overall view and policy decision.
Source: Admirals MetaTrader 5, GBPUSD, Weekly - Data range: from Nov 26, 2017, to Aug 1, 2021. Performed on Aug 1, 2021, at 7:00 am GMT. Please note: Past performance is not a reliable indicator of future results.
The long-term weekly chart of GBPUSD shown above, highlights a strong uptrend since March 2020. Recently, the price has remained in a range in-between the two black horizontal support and resistance lines.
The price has most recently bounced from the bottom of the range. Traders will be looking for an optimistic Bank of England report to help move the market back to the top of the trading range.
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Corporate Trading Updates and Stock Indices
Global stock market indices continue to trade unevenly. Asia stock markets have been depressed following a Chinese government crackdown on publicly-listed technology companies. European stock market indices have also remained in trading ranges with most of the market flow going in to US stock indices.
The Nasdaq 100 and S&P 500 stock market indices recorded new all-time highs last week after a positive earnings season. However, with US earnings season coming to a close, the market will be looking for a new trigger to support price trading at these elevated levels. This could come from the US Federal Reserve or may result in a trend correction.
Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Nov 4, 2020, to Aug 1, 2021, performed on Aug 1, 2021, at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
Past five-year performance of the S&P 500:
- 2020 = +16.17%
- 2019 = +29.09%
- 2018 = -5.96%
- 2017 = +19.08%
- 2016 = +8.80
The chart above shows the recent trend of the S&P 500 stock market index. The cycles and price action highlight a strong uptrend with the exponential moving averages also moving higher.
Dip-buying around some of these moving averages has been the strategy of choice in recent months. However, with earnings season unwinding it will be interesting to see if there will be buyers waiting on the next bounce higher.
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