Fundamental Analysis
Market Summary
Biden’s withdrawal from the upcoming U.S. presidential election has thrown a stun grenade into the market, with most asset classes standing pat as investors digest the event. The dollar remains poised at its high from last Friday, with expectations of strengthening as Trump’s advocacy may favor the greenback. Meanwhile, the U.S. equity market continues to face strong selling pressure, particularly in the tech sector, dragged down by the plummet of CrowdStrike, a cybersecurity company that caused a global IT outage last Friday, triggering a massive sell-off in its stock. However, the equity market may find some encouragement from Biden’s withdrawal, as Trump’s increased winning odds could bring optimism to the market.
In the commodity market, gold slid last Friday, erasing its gains for the week, and the mitigation of U.S. geopolitical uncertainty may further pressure precious metal prices below $2400 in the short term. Oil prices also declined last Friday due to a pessimistic demand outlook. However, China’s rate cut today and the increased likelihood of a Fed rate cut in the near term may provide buoyancy for oil prices to remain above $78 per barrel.
In the crypto market, BTC prices have risen to $68,000, a level not seen in a month, with selling pressure easing as the Mt. Gox BTC repayment is about to conclude. Additionally, Trump’s nomination in the upcoming U.S. presidential election following Biden’s withdrawal has fueled the upward momentum for the biggest cryptocurrency in the market.
Current rate hike bets on 31st July Fed interest rate decision:
Source: CME Fedwatch Tool
0 bps (93.3%) VS -25 bps (6.7%)
Market Overview
Economic Calendar
(MT4 System Time)
DOLLAR_INDX, H4
The Dollar Index, which trades against a basket of six major currencies, remained flat as investors digested the news of Biden’s withdrawal and awaited several crucial economic events. The upcoming week promises to be eventful, with key economic indicators set to be released. The focus will be on the preliminary GDP data for the second quarter, with many economists expecting an uptick. Additionally, the Personal Consumption Expenditures (PCE) data, a preferred inflation gauge for the Fed, will be released on Friday.
The dollar index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 51, suggesting the index might experience technical correction since the RSI retreated sharply from overbought territory.
Resistance level: 103.90, 104.40
Support level: 104.05, 102.80
