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Market Recap
A solid end to the week on Wall Street saw all three major equity indices close with gains of approximately 0.6%. U.S. 10-year yields dipped slightly to 4.19%, while crude oil fell 0.4% to close at $83.40 a barrel. In the currency markets, USD/JPY continued to dominate flows, closing at the lower end of its range from 157.30 to 159.45. The AUD/USD traded within a range of 0.67545 to 0.67935 before ending the week at 0.6784.
Weekend news of an attempted assassination attempt on Presidential candidate Donald Trump saw modest demand for the USD on the Monday open, causing EUR/USD to fall 25 points to 1.0881.
Day Ahead
Looking ahead, today promises to be busy with a raft of data set to be released from China. The key focus will be on the 2Q24 GDP growth figures, expected to be published at midday (Sydney time). Despite a slowdown in momentum, China could still see GDP growth of around 5% year-over-year, thanks to a lower comparison base.
Additionally, CPI growth of 0.3% year-over-year and PPI falling by 1.7% year-over-year in 2Q24 suggest that China may experience deflation for five consecutive quarters, the longest streak since 1999. While real GDP is anticipated to grow by around 5% year-over-year, nominal GDP might only grow by around 4.5% year-over-year due to ongoing deflationary pressures.
The Third Plenum will be held from July 15 to 18, with approximately 400 members of the Central Committee meeting in Beijing. The main theme of the Plenum is “further comprehensively deepening reform and advancing Chinese modernization.” Policymakers may discuss medium-term reform plans, such as changing the fiscal system to find new revenue sources for local governments, boosting business confidence, and supporting manufacturing through innovation.
In other significant events, the Bank of Canada Business Outlook Survey for Q2 could influence expectations for the BoC meeting later in the month, with the likelihood of BoC rate cuts remaining ambiguous. In the U.S., Federal Reserve Chair Jerome Powell will have an interview with David Rubenstein, marking his first public remarks since the release of the June CPI data. Markets will focus on any incremental shifts in Powell’s messaging from his recent congressional testimony.
Economic Data to Watch
- China: Q2 GDP y/y and June Industrial Production YTD y/y
- China: June Property Investment YTD y/y
- China: June Retail Sales YTD y/y and June Fixed Assets Investment
- Eurozone: July Bloomberg Economic Survey
- Eurozone: May Industrial Production WDA y/y
- United States: July Empire Manufacturing
- Canada: Q2 BoC Business Outlook Future Sales
- Canada: Q2 BoC Overall Business Outlook Survey
- United States: Fed’s Powell Interview
Disclaimer
The information provided in this daily market update is for informational purposes only and should not be considered as financial advice. Trading Forex and CFDs involves significant risk of loss and may not be suitable for all investors. Past performance is not indicative of future results. CA Markets does not guarantee the accuracy or completeness of the information provided, and we recommend consulting with a qualified financial advisor before making any trading decisions. Users are solely responsible for their own trading activities and decisions.
