Errante’s The Week Ahead: 26th to 30th August 2024
Highlights of the Week:
Inflation Data: Key inflation figures are expected from several major economies, including the US PCE, Japan Core CPI, German CPI m/m, and the EU CPI Flash estimate.
Economic Indicators: The US Consumer Confidence Index, along with Canadian GDP m/m and Retail Sales figures, will provide insights into economic health and future central bank policies.
Now What?
As we move into the final week of August, traders are keenly watching key economic indicators that could set the tone for the remainder of the year. Here is Errante’s The Week Ahead: 26th – 30th August 2024.
The overall market sentiment for the upcoming week (August 26-30, 2024) is cautiously optimistic. The markets are expected to react significantly to the outcomes of the Jackson Hole Economic Symposium, particularly the speech from Federal Reserve Chair Jerome Powell. Investors are also watching closely for any economic data that could influence the Fed’s decision on future interest rate cuts. While there is optimism, there is also an undercurrent of caution due to potential volatility driven by macroeconomic factors.
Inflation remains at the forefront of market discussions, with several major releases on the horizon. In the US, the Core Personal Consumption Expenditures (PCE) Price Index—a critical inflation measure for the Federal Reserve—will be scrutinized for clues on whether the Fed may continue its dovish stance.
In Europe, German Preliminary CPI and the broader EU CPI Flash estimate are expected to influence the Euro’s direction. A cooler inflation reading could reinforce expectations that the European Central Bank may also remain dovish, potentially weakening the Euro. Similarly, Japan’s Core CPI will be under the microscope as market participants assess whether the Bank of Japan’s ultra-loose monetary policy will continue.
The week also brings the release of the US Consumer Confidence Index and Canadian GDP m/m. Stronger consumer confidence in the US could bolster the case for a delayed rate cut, while Canadian GDP data will be crucial in determining the Bank of Canada’s future policy path.
Market Events and Announcements
The times below are GMT +3.
Monday, August 26, 2024:
11:00 AM – EUR German Ifo Business Climate: Measures the current German business sentiment and expectations for the next six months.
3:30 PM – USD Core Durable Goods Orders m/m: An indicator of manufacturing sector health, excluding transportation items.
3:30 PM – USD Durable Goods Orders m/m: Reflects new orders placed with domestic manufacturers.
Tuesday, August 27, 2024:
4:00 PM – USD S&P/CS Composite-20 HPI y/y: Tracks changes in the value of the residential real estate market in 20 metropolitan regions.
5:00 PM – USD CB Consumer Confidence: Measures consumer sentiment and expectations for the economy.
5:00 PM – USD Richmond Manufacturing Index: A gauge of manufacturing activity in the Richmond Federal Reserve District.
Wednesday, August 28, 2024:
4:30 AM – AUD CPI y/y: A measure of inflation in Australia, reflecting the changes in the price of goods and services.
5:30 PM – USD Crude Oil Inventories: Weekly data on the amount of crude oil held in inventory by commercial firms.
Thursday, August 29, 2024:
All Day – EUR German Prelim CPI m/m: Preliminary inflation data for Germany, the Eurozone’s largest economy.
10:00 AM – EUR Spanish Flash CPI y/y: Provides an estimate of inflation in Spain.
3:30 PM – USD Prelim GDP q/q: Preliminary estimate of the US economy’s growth in the second quarter.
3:30 PM – USD Unemployment Claims: Weekly data on the number of people filing for unemployment benefits.
3:30 PM – USD Prelim GDP Price Index q/q: Measures the annualized change in the price of all goods and services included in GDP.
5:00 PM – USD Pending Home Sales m/m: Measures the change in the number of homes under contract to be sold.
7:00 PM – CHF SNB Chairman Jordan Speaks: Remarks from the Swiss National Bank Chairman can influence the CHF.
Friday, August 30, 2024:
2:30 AM – JPY Tokyo Core CPI y/y: Measures inflation in Tokyo, Japan’s capital, excluding fresh food.
4:30 AM – AUD Retail Sales m/m: A gauge of consumer spending in Australia.
12:00 PM – EUR Core CPI Flash Estimate y/y: The ECB’s preferred measure of inflation, excluding food and energy prices.
12:00 PM – EUR CPI Flash Estimate y/y: An estimate of inflation in the Eurozone.
3:30 PM – CAD GDP m/m: Monthly growth data for the Canadian economy.
3:30 PM – USD Core PCE Price Index m/m: The Fed’s preferred measure of inflation, excluding food and energy.
4:45 PM – USD Chicago PMI: A gauge of business conditions in the Chicago region.
5:00 PM – USD Revised UoM Consumer Sentiment: A measure of consumer confidence in economic activity.
Market Insights: Key Charts to Watch
Chart 1: EUR/USD on Weekly Chart
The EUR/USD pair has been in a robust uptrend, trying to break above the key resistance at 1.11391, driven by a weakening US dollar due to dovish signals from the Federal Reserve and mixed US economic data. The pair recently touched highs not seen since December 2023, suggesting strong bullish momentum.
The pair has broken above the 200-week WMA, confirming a bullish trend. The RSI is approaching overbought territory, signaling that while the momentum is strong, there could be a short-term pullback or consolidation before further gains. The MACD line remains above the signal line, supporting the bullish outlook, but the histogram is showing signs of weakening, indicating that the pace of gains might slow.
Alternative Scenario:
In the event that the upcoming economic data from the US surprises to the upside, particularly with stronger inflation or labor market figures, the EUR/USD could experience a sharp correction. This would likely bring the pair down to test the 1.10736 support level, and a break below this could open the door to a deeper pullback towards 1.09937.
Impact of Upcoming Events:
The release of US Core PCE Price Index and the Eurozone CPI Flash Estimate are likely to be pivotal. If the US inflation data shows further cooling, it could reinforce expectations of Fed rate cuts, driving EUR/USD higher towards 1.11950 and possibly beyond.
The S&P 500 index has shown remarkable resilience, bouncing back from recent dips and maintaining an upward trajectory. The index recently reclaimed the key level of 5,585, a significant technical and psychological level, as it coincides with previous highs and is near the all-time highs set earlier in the year. The index’s performance has been buoyed by easing recession fears and strong corporate earnings, setting the stage for bulls running the market towards 5,650 and 5,720 hurdles. A sustained break above the latter can pave the way for 5,884 and 6,000.
The RSI is approaching overbought territory, indicating the possibility of a near-term pullback. The MACD remains in positive territory, although the momentum is waning, suggesting that while the bullish trend is intact, the pace of gains may slow down. The 34 and 100 moving averages are providing strong support.
Alternative Scenario:
Should the US economic data disappoint, or if geopolitical risks escalate, the S&P 500 could face increased selling pressure. A break below the 5,508 support could signal a deeper correction, with the index potentially testing the 5,490 and eventually 5,400 levels.
Impact of Upcoming Events:
The upcoming US economic data releases, particularly the Core PCE Price Index and Preliminary GDP figures, will be crucial. Positive data could help the S&P 500 break through the 5,600 resistance, pushing towards 5,650 and potentially setting the stage for new all-time highs. However, disappointing data could trigger a correction, with the index potentially falling back towards the 5,508 support level, and a break below this could see a deeper pullback towards 5,470 or even 5,400.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.
3rd Party Cookies
This website uses Google Analytics to collect anonymous information such as the number of visitors to the site, and the most popular pages.
Keeping this cookie enabled helps us to improve our website.
Please enable Strictly Necessary Cookies first so that we can save your preferences!
