Weekly Market Outlook OPEC, RBA & ECB in focus

Juli 19, 2021 13:30

Markets will be first digesting reports over the weekend that OPEC and its allies are targeting a full end to oil production cuts by September 2022. This deal is likely to start in August as oil prices hit their highest levels for more than two years.

Attention will also turn to euro and European stock indices this week in anticipation of the European Central Bank (ECB) press conference on Thursday. It’s likely the bank commit to negative rates for longer creating a divergence with other central banks like the Fed.

The Reserve Bank of Australia (RBA) are also due to release their latest Monetary Policy Meeting Minutes report on Tuesday with European PMI data released on Friday.

You can learn more about some of the global themes affecting the markets in this selection of new education articles.

Weekly Forex Calendar

Source: Forex Calendar from MetaTrader 5 trading platform provided by Admirals

 

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Trader’s Radar – ECB Press Conference

At 12.45 pm BST on Thursday 22 July, the ECB releases its latest Monetary Policy Statement. This will be followed by a press conference at 1.30 pm BST where the euro could exhibit a higher degree of volatility.

That’s because the market is anticipating the bank will change its forward guidance and commit to negative rates for a longer period of time. ECB President Christine Lagarde previously promised new policy signals for this meeting.

The bank has already raised its inflation target and may announce that the pandemic asset purchase programme will be replaced by normal asset purchases afterwards – effectively diverging in policy from other major central banks.

Source: Admirals MetaTrader 5, EURUSD, Weekly - Data range: from Nov 12, 2017, to Jul 18, 2021. Performed on Jul 18, 2021, at 7:00 am GMT. Please note: Past performance is not a reliable indicator of future results.

 

The weekly chart of EURUSD shown above, highlights the range that has developed in between the two black horizontal support and resistance lines. This wedge formation has developed since last October and has produced trending cycles on the lower timeframes.

Currently, the price sits above the lower support level. If the price can breakthrough on a confirmation of diverging monetary policy then sellers could remain in control until the next level of support just under 1.1600.

However, if the bank catches the market off guard, then a series of bullish cycles on lower timeframes could help the currency pair move to the middle of the wedge formation.

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Corporate Trading Updates and Stock Indices

Global stock market indices continue to trend higher but rather unevenly across the world. Asia indices remain range based while European indices have struggled to break to new highs. Only the US indices have managed to remain in clear up trends with some recording all-time highs last week.

Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Oct 22, 2020, to Jul 18, 2021, performed on Jul 18, 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 daily chart of the S&P 500 index shown above, still confirms the overall uptrend in the market. All of the moving averages (20-period, 50-period and 100-period exponential moving averages) are still pointing upwards in the right order.

Historically buyers have stepped in on the 50-period exponential moving average (red line) with the occasional bounced on the 20-period exponential moving average (blue line). These levels still remain the most interesting as we are still in the uptrend.

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