Last week’s CPI data print divulged a shift in the American economic landscape. The publication revealed lower than expected inflation figures across the board, and even a reduction in month-on-month prices in June. The results were surprising enough that it took markets a couple of sessions to digest them in full. The Dollar made another firm step downwards on Friday, the DXY losing another 0.4% to close the week just above 104. Pressure on the Greenback helped Cable push close to $1.30 by Friday’s close, a level not seen since this time last year.
For once, weakness in the Dollar did not translate to gains in precious metals. Gold dipped lower during Friday’s session before almost climbing back up into the black later in the day, finally closing at $2,410 an ounce.
US indices had a very encouraging end to the week, particularly the Dow Jones Industrial Average, which reached fresh intraday highs on Friday before settling at 40,000.90 points – a hair’s breadth below its record high daily close in May. The S&P 500 and Nasdaq Comp also put in respectable performances, although their efforts were not enough to undo the damage done over Thursday’s sell-off. If an interest rate cut is indeed on the menu, then the pivot out of major hype stocks and back into the rank and file of US markets is to be expected.
Chinese data publications dominated the economic calendar today, with most notably a surprise miss in the Q2 GDP growth, coming in at 4.7% versus expectations of 5.1%. Later this evening, Federal reserve Chairman Jerome Powell is set to speak yet again, this time at the Economic Club in Washington. North American data occupy much of the stage on Tuesday, with Canadian CPI figures and US retail sales. Inflation numbers courtesy of the UK and the Eurozone on Wednesday, followed by an array of unemployment metrics on Thursday, as well as the ECB interest rate decision. Friday finishes off the week with Japanese inflation figures, followed by UK and Canadian retail sales.
Economic news aside, given the shocking events in Pennsylvania on Saturday, it is fair to say that electoral politics will be the dominant driver of market movements this week. The assassination attempt of presidential candidate Donald Trump is a self-evidently momentous event, one that will take time for markets to fully absorb. It is still too early to adequately gauge trader sentiment, but the obvious implications as to the outcome of the 2024 US election will occupy the minds of many.
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