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15/07/2024 - 07:55 UTCThe U.S. dollar fell against most major currencies last week, with the dollar index (USDX) losing 0.71% of its value on the iFOREX platform, to hit price levels last seen in April. Some support in the US currency was seen early Monday, as speculation intensified about a potential victory in the upcoming U.S. elections, following a reported assassination attempt on a former U.S. president.
According to market analyst, the attempted assassination probably enhances Trump's "reputation for strength" with odds on online betting sites indicating that Republicans are almost twice as likely to win the election as Democrats.
In other news, Bitcoin and Ethereum, the top two cryptocurrencies by market cap, reversed their course following 4 consecutive weeks of losses, gaining 1.69% and 3.57% respectively. Bitcoin extended its gains early on Monday following increased interest in the cryptocurrency space, potentially fueled by Trump’s assassination attempt and rise in popularity, as the former president has on several occasions expressed his support for cryptocurrencies.
Wall street is back on a winning spree, as U.S. stock indexes came close to record highs once more amid growing optimism over interest rate cuts. According to reports, some support could possibly derive from speculation over what an attempt on Trump’s life meant for the 2024 presidential race. Trump is now set to appear at the 2024 Republican convention this week, where he is likely to be officially named as the party’s presidential nominee.
Traders are raising bets for a September rate cut as seen in the CME FedWatch tool, with the likelihood currently at 89.9%. Expectations for a rate cut in November fell from levels above 50% to 37.7%.
Focus for today could be on a testimony by Fed chairman Jerome Powell at the Economic Club of Washington DC, where audience questions expected. Some price action could also be observed upon the release of the Empire State Manufacturing index, a leading indicator of economic health as businesses tend to react quickly to market conditions.
The EUR/USD pair ended the session on Friday 0.29% higher and rose for a third consecutive week.
June’s core Producer Price Index (PPI) for wholesale inflation in the US rose to 3.0% YoY, surpassing the expected 2.5%. Despite the notable increase in producer-level inflation, market focus has shifted to the earlier decrease in Consumer Price Index (CPI) inflation, raising expectations for a rate cut.
In other US economic data released on Friday, the University of Michigan's Consumer Sentiment Index survey dropped to a seven-month low of 66.0, falling short of the expected increase to 68.5. Additionally, the University of Michigan's 5-year Consumer Inflation Expectations decreased slightly in July to 2.9% from the previous 3.0%.
US Retail Sales figures are on the docket for this Tuesday, and market participants will be buckling down for the wait to this week’s latest rate call from the European Central Bank (ECB), slated for early next Thursday.
Gold prices ended the session on Friday with minor losses, but hotter-than-expected producer prices were not able to end the third consecutive week with gains.
While Friday’s Producer Price Index did take some momentum away from gold, the precious metal was able to hold critical support at $2,400 an ounce.
Meanwhile, in his two days of testimony on Capitol Hill, Powell warned Congress that risks to the economy are balanced. “Elevated inflation is not the only risk we face,” Powell said in his prepared remarks.
Although all eyes are currently on the Federal Reserve, economists will shift their focus next week to the European Central Bank, which will announce its interest rate decision Thursday. Markets are expecting the ECB to keep rates unchanged after cutting in June.
Oil futures prices settled lower on Friday as market participants weighed weaker U.S. consumer sentiment against mounting hopes for a Federal Reserve rate cut in September.
A monthly survey by the University of Michigan showed U.S. consumer sentiment fell to an eight-month low in July, although inflation expectations improved for the next year and beyond.
Oil prices have drawn some support from U.S. gasoline demand, which government data showed on Wednesday was at 9.4 million barrels per day (bpd) in the week ended July 5, the highest since 2019.
U.S. main indices rose on Friday after shrugging off a modest uptick in wholesale inflation as investors digested better-than-expected quarterly earnings from a slew of Wall Street banks.
A trio of Wall Street banks including JPMorgan Chase, Citi, and Wells Fargo kicked of the second-quarter earnings season in earnest.
JPMorgan Chase, which is the largest bank in the United States, reported quarterly results that topped Wall Street estimates, but that was overshadowed by underwhelming net interest income.
Wells Fargo & Company cut its outlook for net interest income, sending shares more than 5% lower, while Citigroup Inc stock fell nearly 1% after reported earnings. Investors are looking forward to robust profit growth from a diverse range of companies, which could potentially extend the rally in U.S. stocks beyond the dominant tech sector.
Moreover, Tesla Inc jumped almost 3% on Friday, shrugging UBS' downgrade on the stock to neutral to sell amid valuation worries.
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