This week, global markets are poised for potential shifts as several key economic events unfold, which could significantly influence investment strategies. Key focus will be on critical data such as inflation figures, trade balances, and central bank decisions from major economies. These indicators will be crucial for assessing the current economic landscape and future monetary policy expectations.
On Wednesday, July 31, attention will turn to the Bank of Japan’s monetary policy decision, alongside their Monetary Policy Statement and press conference. These events are expected to impact the Japanese yen and market sentiment in Asia. Additionally, the release of CPI and Retail Sales data from Australia will provide insights into inflation trends and consumer spending in the region. In the United States, the ADP Nonfarm Employment Change report will be a key focus, offering a preview of the broader employment situation. Later, the Federal Reserve’s FOMC Statement and Interest Rate Decision will be scrutinised for indications of future monetary policy directions.
On Thursday, August 1, the Bank of England will announce its Interest Rate Decision, supported by the MPC Meeting Minutes and vote breakdown. These releases are vital for evaluating the monetary policy stance in the UK. In the United States, data including Initial Jobless Claims and the ISM Manufacturing PMI will provide fresh insights into the labor market and manufacturing sector's health.
On Friday, August 2, the spotlight will be on the Nonfarm Payrolls report in the United States, a crucial indicator of the labor market's strength, and the Unemployment Rate, which offers additional context. The average hourly earnings data will also be examined for signs of wage inflation. Together, these figures are pivotal for understanding the broader economic outlook and will likely influence market expectations for future interest rate movements. Additionally, the Baker Hughes Oil Rig Count will provide updates on the energy sector, potentially impacting oil prices.
DXY
4h chart:
The Dollar Index (DXY) has surpassed the resistance level at 104.55, triggering an inverted head and shoulders pattern with default targets set at 105.15. Anticipation of a bearish alt-bat pattern is expected at the 113% Fibonacci extension of 105.41. The development of this pattern above the fractal resistance could lead to a pullback in the dollar index, potentially exerting downward pressure on related currency pairs such as EUR/USD, GBP/USD, while continuing to impact AUD/USD and NZD/USD.