Introduction:

The past week, Global markets witnessed a shift in market sentiment as investors turned their attention to statements from major global central banks. The optimism that had driven risky assets forward momentarily stepped aside as market participants carefully analyzed these pronouncements for insights into the future trajectory of monetary policies. As the week unfolded, a series of events and economic indicators brought both positive and concerning developments across various asset classes.

 

Week’s Initial Optimism:

The trading week commenced on a positive note, with early gains fueled by signs of cooling US inflation. The Core Personal Consumption Expenditures (PCE) indicator pointed to sluggish growth in June, providing a glimmer of hope for those looking for signs of easing inflationary pressures in the global market. Additionally, anticipation swirled around significant stimulus announcements from China, boosting market confidence.

 

Credit Rating Blow:

However, market sentiment took a hit when Fitch Ratings downgraded the sovereign credit rating of the United States from AAA to AA+. This unexpected decision was attributed to the country’s expanding fiscal deficit and a concerning deterioration in governance over the past two decades. The announcement served as a reminder of the underlying challenges in the global market and economic landscape.

 

How will Currency Fluctuations and Employment Data affect the global market?

The resilience of private payrolls reports led to a resurgence in the US dollar, which reached a one-month high of 102.84 n the global market. Investors closely watched the much-anticipated non-farm payrolls (NFP) data release on Friday. The results were mixed, with the unemployment rate and job additions falling beyond expectations. However, average hourly earnings surpassed predictions, triggering profit-taking in the greenback.

 

Commodities Market Dynamics:

In the commodities arena, COMEX Gold faced a notable decline, marking its steepest weekly drop in six weeks. The strengthening job market bolstered the Federal Reserve’s case for potential rate hikes, causing a downturn in precious metal demand. Silver followed suit, experiencing a 3 percent decrease due to weakened gold and industrial metals performance. Investment demand for bullion waned, evident in reductions in holdings of SPDR and iShares.

 

Technical Outlook for Precious Metals:

Technical analysis indicates potential support for COMEX Gold around the $1,936 per troy ounce mark, while COMEX Silver may find a supportive level near $23.10 per troy ounce, notably a key 200-day moving average (DMA) support level.

 

Base Metals’ Roller Coaster:

LME base metals experienced a roller coaster ride during the week. Starting on a positive note, they enjoyed a substantial rally, contributing to the most significant monthly gains since January. However, prices retraced from their monthly highs as China refrained from unveiling substantial measures to bolster domestic consumption. Despite economic challenges and growing property market stress in the global market, concrete policy steps remained elusive.

 

Crude Oil’s Resilience:

In contrast, crude oil demonstrated robust fundamentals, achieving its sixth consecutive week of price increases. Saudi Arabia’s extension of its independent 1 million barrel-a-day oil output cut to September, alongside Russia’s continued voluntary reduction, supported oil prices. These actions aligned with our previous article’s prediction of NYMEX Crude prices nearing the $82.50 per barrel objective, which materialized.

 

Hurdles Ahead for Crude Oil:

Looking forward, attention shifts to the next robust resistance level at $83.80 per barrel. This multi-month resistance zone poses a considerable challenge for bullish momentum due to its significance. A failed attempt to breach this level could lead to a consolidation period within the range of $79.50 to $83.80 per barrel.

 

Upcoming Focus:

As the new week approaches, all eyes turn to inflation data releases from both the US and China. A potential decrease in US inflation would likely be welcomed by investors, potentially influencing monetary policy expectations. Meanwhile, ongoing easing of price pressures in China could signal a delicate economic recovery, potentially sparking discussions about policy interventions to assist private developers and stimulate growth.

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Disclaimer:

The insights and investment suggestions expressed in this article are the views of the experts and not representative of the website or its management. Readers are encouraged to seek advice from certified experts before making any investment decisions. As global markets continue to navigate uncertain waters, staying informed and seeking expert guidance remains paramount.