26/07/2024
Written by: Ian Morley
Summary
Yesterday saw a continuation of market trends, with increased risk appetite pushing markets higher, nearly reaching the significant milestone of 5,000 for the S&P 500. GBP maintained its upward trajectory while USD saw marginal declines across various currencies. Remarks from Kashkari, Kugler, and Collins of the Fed had minimal impact.
Speeches:
Analysis:
The primary data point of interest today is the jobless claims figures, though we anticipate limited market impact. Should equity markets continue their ascent, we foresee minor USD weakness. Expectations are for commentary from ECB hawks opposing market sentiments on rate cuts, along with insights from BoE’s traditionally hawkish figure, Mann. It remains to be seen if Mann aligns with Dhingra and Pill’s dovish stance.
Chart Analysis:
Amidst the prevailing market sentiment favouring risk, it’s pertinent to examine the influence of short-term interest rate expectations on GBPUSD and EURUSD. Prior to the recent Fed meeting, there was a 60% probability of a rate cut in March. However, following Fed Chair Powell’s remarks, last Friday’s job data, and Monday’s ISM figures, the likelihood drastically decreased to 12%. Presently, markets have settled with odds at 20% ahead of next week’s CPI data. Any uptick in inflation could further diminish these odds, potentially leading to declines in GBPUSD and EURUSD pairs.