Markets Week Ahead: ECB Rate Decision, US NFPs – USD, Gold, Euro, Nasdaq

  • ECB to cut interest rates by 25 basis points on Thursday.
  • US jobs week culminates with NFPs on Friday.
  • Gold eyes early-May lows.

Navigating Volatile Markets: Strategies and Tools for Traders

This week promises to see significant potential volatility as the European Central Bank (ECB) announces its policy decision and the latest US Jobs Report is released.

In Europe, the ECB is expected to cut rates by 25 basis points. The key question is whether ECB President Christine Lagarde will signal the timing of the next rate cut. The markets are suggesting that the second rate cut may be announced at the September 12th meeting, but October 17th is now seen as more likely. The ECB’s post-decision press conference will need to be closely analyzed.

In the US, a slew of labor market data – JOLTS, ADP, and initial jobless claims – will be released before Friday’s US Jobs Report. The market has pushed back expectations of the Federal Reserve cutting rates in recent months as inflation remains uncomfortably high. Any signs of weakness in the US job market could cause the market to start repricing the likelihood of Fed rate cuts.

Additionally, the Bank of Canada will announce its latest policy decision, Australian GDP data will be released, while the US ISM Services data is always worth monitoring.

The US dollar looks under pressure and the US dollar index is withing 20 pips of printing a two-month low. From a technical viewpoint, the USD index is testing the 200-day simple moving average, and a confirmed break lower could see the greenback trade below 104.00.

US DOLLAR INDEX DAILY CHART

Gold also looks vulnerable to a move lower. US Treasury yields rose during the week, driven by a raft of bills and bond sales, and a test of the $2,280/oz. looks likely. Friday’s US NFPs will direct the gold’s future performance.

GOLD DAILY PRICE CHART

The Nasdaq 100 turned lower this week as cracks started appearing in Magnificent Seven members. With the index pulling back from a sharp early sell-off, Friday’s price action will give bulls some hope of higher prices. Still, an index dominated by a handful of mega-cap companies remains vulnerable to a change in sentiment.

Nasdaq 100 Daily Chart

All Charts using TradingView

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