Earning – Forex Academy

Macroeconomic Update – Weekly Outlook (July 23 – 27)

Markets closed with positive returns since they had a positive start due to the strong quarterly results reported by companies along with the optimistic tine by Powell, president of the Fed.

However, it started losing momentum as Trump stated he was considering in implementing new tariffs to Chinese goods increasing the concerns on trade wars and protectionism

o This also led to the Yuan to depreciate to new low levels

So, this contrast between a solid earnings report from companies and the tension between commercial policies will guide the markets next week.

Starting with the macroeconomic indicators, they are forecasted to have a positive tone this week.

o Among the main indicators in Europe, PMI & IFO are expected to be lower than the previous months but will hold in good levels

On Thursday, it will be the meeting of the ECB which is expected just be transition meeting confirming the end of the conventional program of asset purchases at the end of 2018
Regarding the United States

o On Friday, GDP of the second quarter will be released which is expected to reach 4%

Hence, this acceleration will confirm the expansive cycle
Another fact that should support the markets is the quarterly results making this week possibly the year

o 180 companies are reporting earnings this week, and the outlook is positive

So far, regarding the ones that already have reported, have averaged a earnings growth of 20,8%, slightly above expectations

Due to these strong fundamentals both from the macro perspective and from the earnings report, trade tensions could be placed in the background.

Nevertheless, on Wednesday Yunker and Trump are meeting.

o Yunker will meet with some proposals regarding the trade deals and tariffs on automobiles

o It will provide some hints on what is the outlook regarding the trade deals of United States with the rest

Hence, it is a week to be patient and hold the long positions in the markets since the macro and fundamentals remain strong and positive.

Hot Topics.

Dollar Index drops despite the increase in Retail Sales (MoM) in March.
Sterling strikes the highest level of the year for a second time.
Japanese Cabinet says the economy is “recovering moderately.”
Watching the Copper bullish cycle.
US Indexes climbs are boosted, aided by the companies earnings reports.

Dollar Index drops despite the increase in Retail Sales (MoM) in March.

The US economy continues showing strength signals about its economic growth. This time it was the retail sales report shift that advanced up 0.6% from February 2018 and 4.5% (YoY). Sales from the vehicle and parts dealers boosted 2% in March. Despite this good news, the US Dollar Index fell 0.40% touching its PRZ. While the price continues above the 88.52 level, we will consider the chance of a new bullish cycle.

The Euro, which represented more than 50% of the Dollar Index, closed the session with 0.41% gain. The pair still has almost 40 pips of space to reach its PRZ, previous to the ZEW economic sentiment data release. Meanwhile, the Index still could maintain its trading range. The invalidation level of the reversal scenario is above 1.2476.

Sterling strikes the highest level of the year for a second time.

The Pound is the best performing currency of the year with an advance of 6.24% (YTD). Not even the uncertainty driven by the Brexit negotiations or the negatives consequences of the severe weather conditions that have impacted some sectorial economic indicators have been enough to slow the Pound rally. In our last Daily Update, we saw a potential top and reversal pattern; our vision is that we could witness a 2B Pattern. In this case, we will be attentive to a breakout candle before to pulling the trigger.

Japanese Cabinet says the economy is “recovering moderately”.

The Cabinet Office of Japan described Japan’s economic growth as a “recovery at a moderate pace”. The private consumption and business investment in exports are “picking up”. Concerning the tariffs tensions between the US and China, the Cabinet economists see it as a risk factor they will observe closely. The USDJPY pair fell 0.31% to our PCS (Potential Continuation Section) as a bearish wedge pattern. If the price remains above 106.61, our vision continues to be bullish.The Pound/Yen cross is testing the second monthly resistance pivot level; however, it still could make new highs before a deeper correction. Our vision is that the cross could climb to the area between 155.8 – 157. Selling positions are considered only if the price breaks below the 152.95 level.

Watching the Copper bullish cycle.

Copper is developing a bullish cycle since January 2016. It is currently in an ascending expansive triangle pattern. In the long term, the red metal has “market debt” in the 3.44 level. In the short-term, as long as the price keeps above 2.98, the trend is bullish. If the price moves down to 3.01 – 3.03, copper could find new buyers at those levels, with their targets at around 3.20 – 3.21 and its extension in the 3.25 – 3.28 area.

US Indexes climbs are boosted, aided by the companies earnings reports.

This week, the big companies started their quarterly earnings release. The optimistic analysts’ expectations came under the assumption that results are coming mainly from activities made before the tariffs conflict between the US and China. Dow Jones 30 closed the first trading session of the week with an advance of 0.44%. The Dow is testing the key level 24,620 and we are watching from our short-term picks. The invalidation level is below 24,090.

In the same way, Nasdaq 100 closed the session advancing 0.43%. The Technological Index is moving in an ascending triangle pattern. Mid-term, we expect that the price will hit the 7,090 level. The invalidation level for the bull market scenario is below 6,398 pts.