This article was submitted by Antreas Themistokleous, market analyst at Exness.
This preview of weekly data looks at USOIL and XAUUSD, where economic data coming up later this week are the main drivers in the markets for the near short term outlook.
The most important economic data for this week are:
RBA interest rate decision tomorrow at 04:30 AM GMT. The market is expecting the Reserve Bank of Australia to hike the interest rates with a further 0.25% taking the final figure to 4.35%. If this is confirmed we might see some gains in favor of the Aussie Dollar against its pairs at least in the short term.
FOMC minutes on Wednesday at 06:00 PM GMT. This publication is important for understanding the odds of an interest rate hike in the next Fed meeting. The consensus is around a single hike, but the main intrigue about further monetary tightening is whether it will continue or not. Currently market participants are pricing in a probability of another hike in the July meeting at 89% according to the Fedwatch tool.
Australian & American balance of trade on Thursday at 1:30 AM & 12:30 PM GMT respectively. The Australian figure is expected to decline to A$10.5B while the American figure is expected to rise to $-69.5B from $-74.6B on the previous reading. This could affect the 2 currencies but only slightly if any since the data is for the month of May which might be already priced in the market.
US Services PMI on Thursday at 14:00 GMT. The expectations are for a rise of around 0.7 points indicating that the services sector in the States is holding above water and also expanding since the figure is generally expected to remain above the 50 point mark. Since this data is for the month of June and are positive news for the Dollar we might see some gains against its pairs.
US job report on Friday at 12:30 PM GMT. The NFP is expected to come in at around 225,000 against the previous release of 339,000 and unemployment in the USA is expected to remain static at 3.7%. If these expectations are correct, we might see that the dollar could move down in various pairs and against gold in the near future after the release.
Oil prices are on the rise after Saudi Arabia and Russia announced supply cuts for August. Saudi Arabia extended its voluntary production cut of one million barrels per day (bpd) for another month, while Russia announced it would reduce its oil exports by 500,000 bpd in August. Both countries are trying to prop up prices, which have dropped due to concerns of an economic slowdown and ample supplies from major producers. On the other hand, fears of a global economic slowdown and potential US interest rate increases continue to limit gains. Eurozone manufacturing activity contracted faster than expected in June, and concerns over a slowdown in fuel demand have grown.
On the technical side, the price has been trading in a declining triangle formation for the last two months and currently the price is trading very close to the upper boundary of the triangle, possibly indicating a correction to the downside. The Stochastic oscillator is not indicating any overbought or oversold levels but it is pretty close to the extreme overbought levels. The 50 day moving average is still trading well below the 100 day moving average indicating that the bears are still stronger than the bulls and if the upper boundary of the triangle proves to be strong resistance then the bearish narrative could be reinforced in the near short term.
XAUUSD, daily
Gold prices fell on Monday after the rise in the dollar index and the increase in the 10-year U.S. Treasury yields which are also contributing to the decline in gold prices. Investors are eagerly awaiting U.S. non-farm payrolls data and minutes from the latest Federal Reserve meeting later this week which are major publications that are expected to create volatility in the market. Unchanged U.S. consumer spending in May suggests that the Fed’s rate hikes to control inflation are gradually working but despite this, it is too early to suggest that the Fed will consider rate cuts any time this year. High interest rates discourage investment in gold, while investors predict a 89% chance of a 25 basis points U.S. rate hike in July according to the Fedwatch tool.
From a technical standpoint, the price has found support at the $1900 level which is made up of the lower band of the Bollinger bands, the 61.8% of the weekly Fibonacci retracement level and also the psychological support of the round number. At the time of this report the price is trading just above the Fibonacci level while the Stochastic oscillator is not indicating any overbought or oversold levels meaning that the price could head to any direction. The 50 day moving average on the other hand has recently crossed below the slower 100 day moving average possibly signaling that the overall bearish trend is still in effect.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
