Weekly Market Outlook FOMC, CPI & FAANG earnings in focus
This week, all eyes turn to Wednesday’s US FOMC Press Conference. Traders will be eager to learn more about the Fed’s tapering plans after a dramatic shift in policy last month which sent the US dollar surging higher.
Consumer Price Inflation (CPI) figures will also be closely watched this week in Australia and Canada. Inflation is one of the key metrics used by central banks to determine when to cut or increase interest rates.
US earnings season has so far provided a big boost for US stock market indices. As European earnings season gets underway, traders will be focused on European stock market indices which have remained fairly range based in recent months.
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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 – FOMC Press Conference
At 7.00 pm BST Wednesday 28 July, the US Federal Reserve members release their latest FOMC Statement. This will be followed by a press conference by Fed Chairman Jerome Powell at 7.30 pm BST.
The Fed have already announced a major shift in policy actions where they are now focused on tapering much sooner than previously stated. Traders will be keen to know more details about when the tapering will start and what the reduction in asset purchases will be.
However, it is a tricky situation as since the Fed announced their plan to start tapering, the Delta variant has taken hold in the United States. This is now the most dominant strain in the US as it is in most countries around the world.
Source: Admirals MetaTrader 5, USDX, Monthly - Data range: from Apr 1, 2005, to Jul 25, 2021. Performed on Jul 25, 2021, at 7:00 am GMT. Please note: Past performance is not a reliable indicator of future results.
The monthly price chart of the US Dollar Index shown above depicts a clear long-term consolidation pattern, as shown in-between the two black horizontal lines. At the beginning of the year, the price rejected the bottom of the consolidation pattern sending the US dollar higher.
However, the weekly chart below shows it is now running into some technical resistance around $93 which is March’s high.
Source: Admirals MetaTrader 5, USDX, Weekly - Data range: from Nov 12, 2017, to Jul 25, 2021. Performed on Jul 25, 2021, at 7:00 am GMT. Please note: Past performance is not a reliable indicator of future results.
This could be an area where buying momentum could start to wane. But, a break above this price level could see the US dollar try to move back to the top of the long-term monthly range shown in the first chart.
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Corporate Trading Updates and Stock Indices
While fund managers have bemoaned the elevated prices in US stock market indices, retail dip buying has kept the overall trend alive. The Nasdaq 100 and S&P 500 stock indices surged to record highs last week but it will be worth watching the Fed’s FOMC Press Conference for any changes in sentiment.
Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Oct 29, 2020, to Jul 25, 2021, performed on Jul 25, 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 stock market index shown above, highlights the long-term bullish trend that started in October 2020. As all the moving averages are still pointing higher, it’s clear evidence the trend is still up with buyers active around these levels.
US earnings have been strong and that has helped sentiment. As European earnings gets underway, keep an eye on these US and European companies that are due to report this week among others:
- Monday – Louis Vuitton, eBay, Visa, AMD
- Tuesday – Boeing, Starbucks, Microsoft
- Wednesday – L’Oreal, Barclays, Ford, Facebook, Apple, Google, Amazon
- Thursday – Shell, Airbus, Lloyds Banking
- Friday – AF-KLM, Exxon Mobil, Procter & Gamble
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