General Comment

Last week was relatively calm for financial markets as there were no developments or announcements that would largely fix the trend or increase volatility. Concern was raised by the Chinese government’s ban on the use of iPhones by government officials, which was extended shortly after to government-backed agencies and companies. Markets feared this could be the start of a more general ban on Apple products or a more general change in China’s behavior towards Western technology and imports. However, it seems that these concerns were not strong because the markets resisted without big losses.

In the US, the ISM PMI service index was announced at 54.5, well above its latest price and market expectations, which gave new life to the image of the US economy. However, as is usually the case lately, such news may mean room and comfort for the Fed to carry out a hike of interest rates since, admittedly, the problem of high inflation remains. Inflation was announced for July at 3.2% slightly up from 3% in June. The recent rise in energy prices may be another reason for fears as well. So, it makes sense that such concerns exist, and the markets can’t be sure that the cycle of tightening monetary policy and raising interest rates is over.

In the Eurozone, the problematic outlook of the economy continues. Eurozone GDP grew in the second quarter by just 0.1% and retail sales fell in July by 1%. PMI indicators for services are consistently below the 50 which means contraction. Christine Lagarde made two speeches last week but showed no intention and some preference with respect to the European Central Bank’s monetary policy in the future. The European Central Bank meets on Thursday on interest rates and monetary policy.

In China, the situation is improving after manufacturing and services showed some recovery. Of course, the concerns remain because imports and exports remain in decline, affecting the country’s trade balance which appears to be quite reduced compared to expectations. Also last Saturday, inflation in China was announced at 0.1%, a situation that may indicate a slowdown in growth.

The milestone for the current week is the announcement of inflation in the United States on Wednesday. Α resurgence of inflation would be troubling and would increase the likelihood of further intervention by the Fed. Based on this expectation, markets last week moved quietly with little volatility and no apparent trend. The commodity market had a mixed picture with gold falling while oil continued its upward rally. The U.S. dollar had another week of uptrend and other higher-risk currencies such as the euro and sterling continue to weaken. Bond yields also rose further with the U.S. 10-year closing the week near 4.26%. Finally, slight downward trends showed Bitcoin and most cryptocurrencies.

In addition to the announcement of inflation in the US on Wednesday, the announcement of interest rates and monetary policy in the Eurozone on Thursday is also very important. In addition to these two major events, the UK will announce the GDP and the unemployment rate, China will announce industrial production and retail sales. Finally, the Michigan Consumer Sentiment Index which will be announced on Friday is also important.




With bearish trends, the US SP500 index closed last week, at 4,457 points, and a loss of 1.30%. Developments from China and the ban on iPhones to state officials raised concerns that mostly hit the tech industry in the United States. Fears have been raised that a new trade war could break out between the two economies (the US and China) with unpredictable consequences. On top of that, there have been some hawkish statements from Fed officials that have fueled new scenarios for a rate hike this year. The likelihood that interest rates will remain unchanged in the September session is now very high but that doesn’t mean there won’t be an increase in one of the next sessions. The positive picture of the United States economy gives the central bank room for this. Especially if the inflation announced this week does not create optimism of de-escalation, then this climate may intensify even further and for this reason, we may try short positions this week.



The German DAX40 index was bearish last week, closing at 15,740 points, with losses a bit more than 0.60%. While the international sentiment in the equity markets was negative, DAX40 had comparatively small losses and managed to overcome the price range of 15,600 points, which is an important support. In this area, the index has tried to break out four times within the last few months, but buyer forces always appear that prevent further decline. The European Central Bank’s lackluster stance is raising expectations in markets that the interest rate cycle may be near its end, and doing so is boosting European equity markets. The German economy continues to have problems, as at least the latest announcements of last week show. The trade balance has fallen, PMI indexes remain firmly well below 50, factory orders fell by 11.7% in June, industrial output fell by 0.8% while inflation continues to remain at high levels and was reported for last month at 6.4%. Despite the durability of the index the negative factors are starting to accumulate and so we will choose short positions this week.



The British FTSE100 index moved upward last week, closing at 7,478 points, earning about 0.20%. The UK index was able to outperform most major equity indices in Europe and the US and to close in positive territory. The UK economy did not have any impressive economic announcements, but the latest statements by Bank of England executives in a dovish tone gave a breather to equity markets. While the problem of inflation in the UK remains very severe, if the Bank of England turns out to be less aggressive than everyone expects, it will be of benefit to the equity market. Markets are looking forward to the UK GDP and the unemployment rate announcements this week, and if nothing changes from Bank of England officials, we may see further growth and for that, we may try long positions this week.



The previous week was bearish for gold, with the next month’s futures closing at $1,942 and losses of more than 1.20%. It was a correction after two consecutive bullish weeks, even if the US dollar stopped its sharp uptrend. The United States continues to release good economic data which gives the impression to the markets that the Fed is able to apply at least one more interest rate hike until the end of the year. This impression is getting strong after the increased energy prices lately which may be a factor of the inflation rekindling. US inflation had an upward turn last month (from 3% to 3.2%) and if we see something similar in the current week’s announcement for August then the probability of a new interest rate hike will increase significantly. Also, gold prices were hit by the new increase in bond yields. We remind you that interest rates and yields have a negative correlation with gold. Along with the US inflation announcement, the interest rate decision in the Eurozone area will be another critical factor for gold prices. In case of the dollar’s strengthening, we should wait for more pressure in gold so we may try short positions this week. The next major support is at $1,900 so there’s still room for drop.


US Oil

Last week was bullish for oil with the next month’s futures closing at $87.20, with profits a bit above 1.40%. During the past week, oil prices exceeded the price of $88 which was the highest price since last November. The oil price kept on increasing, driven by the extension of Saudi Arabia and Russia’s supply reductions, which are now in effect until the end of the year. The United States saw a more significant reduction in crude oil reserves than initially expected, offering limited backing to oil prices. Crude stockpiles in the U.S. have now decreased for the fourth consecutive week, with a notable drop of 6.3 million barrels, while analysts predicted 2 million barrels. The rise of the oil prices could be higher but news from China held the prices relatively lower. The ban on iPhone usage by Chinese officials has created fears that a new trade war may explode between the USA and China with unpredictable consequences. Beyond these fears, China had another set of disappointing economic data last week as the imports, the exports, and the trade balance were announced well below the markets’ estimations and the inflation was announced at 0.1% last month which indicated a deflation. China is the biggest oil consumer in the world and growth slowing affects the oil demand. China may affect further oil this week and in case the dollar keeps on strengthening, we cannot rule out a correction in prices so we prefer short positions.



EURUSD (Euro – US Dollar)
Last week was bearish for EURUSD as it opened at 1.0775 and closed at 1.0698. The U.S. dollar was not particularly strong last week. keeping rather a wait-and-see attitude for the upcoming inflation announcement next Wednesday in the USA. However, the EURUSD continued its downward path for the eighth consecutive week, and this is of course due to the weakness of the euro. It is not only the poor economic picture that the Eurozone presents lately as we mentioned above and in the general comment. There is an ambiguity regarding monetary policy and interest rate policy from the European Central Bank as officials keep repeating that everything will depend on economic data. Of course, the inflation problem remains and is more severe in the Eurozone than in the United States. The difference in interest rates between the two central banks is already large, and if the ECB does not make its intentions clear, this is at the expense of the euro. Many things will clear up this week because there will be the United States inflation announcement that will largely determine the Fed’s next actions. The decision on interest rates in the Eurozone is also announced with the market watching with interest the developments and whether there will eventually be an increase or not. If the U.S. dollar continues to strengthen, we may see the exchange rate threaten very significant support close to 1.0635, and therefore we will choose sell positions for one more week.


GBPUSD (Great Britain Pound – US Dollar)

Bearish was the last week for GBPUSD, which opened at 1.2585 and closed at 1.2460. The downward trend for the exchange rate continued, based not only on the US dollar but on the weakness of sterling. Some executives from the Bank of England appeared dovish. Swati Dhingra, an external member of the Bank of England’s Monetary Policy Committee, expressed on Wednesday that the present interest rate policy is adequately constraining, and additional increases in interest rates could expose the economic outlook to risks. Dovish comments usually weaken the sterling. In terms of economic results for the UK, the PMI (composite and services) indicators were announced as improved but again below 50. This week contains more news on the UK economy as unemployment and GDP are announced. However, the focus remains on the announcement of inflation in the United States which will largely determine the stance of the U.S. dollar. Technically speaking, the GBPUSD has come close enough to the significant support of 1.23 and we may try sell positions for the current week.


USDJPY (US DollarJapanese Yen)

USDJPY moved upward last week, opening at 146.06 and closing at 147.78. With another bullish week for the U.S. dollar, the exchange rate climbed to the highest price levels seen since last October. The continued very loose monetary policy from the Bank of Japan contributes decisively to this since it is the only major central bank that continues to maintain negative interest rates. If there is another Fed rate hike and things in Japan do not change, the gap is expected to widen further. The economic results from Japan last week were not particularly encouraging either. The Leading Economic Index fell further and Japan’s GDP for the second quarter of the year was reported to be up 1.2% from 1.5% in the previous quarter. However, as the USDJPY nears the critical area of 150 there are convictions and concerns that the Bank of Japan may intervene to prop up its country’s currency. It’s something that’s been done before and that officials from the central bank have not ruled out. The trend continues to remain bullish but any monetary intervention from Japan could cause a violent fall so we will stay out for the current week.


EURJPY (EuroJapanese Yen)
Bullish was last week for EURJPY which opened at 157.45 and closed at 158.10. The euro is going through a period of weakness due to the negative image of the Eurozone economy lately, but also due to the indecision shown by the European Central Bank in relation to inflation, monetary, and interest rate policy. But EURJPY continues to move in a 15-year high range due to the extreme weakness of the Japanese currency. The yen continues to weaken after continued loose monetary policy from the Bank of Japan does not allow the opposite. Yen’s great weakness, however, may lead the Bank of Japan to monetary interventions and that is why we will avoid taking a position this week.


EURGBP (Euro – Great Britain Pound)

Last week was bullish for the EURGBP, as it opened at 0.8555 and closed at 0.8586. Currencies such as the euro and sterling have been under pressure lately because of the problems in their economies but also because of negative investing sentiment that is pushing some investors towards safer currency solutions. However, the dovish position taken by executives from the Bank of England further weakened sterling and created the weekly result for the EURGBP. The UK has major announcements this week in relation to unemployment and GDP, but more important is the European Central Bank’s decision on interest rates and monetary policy. If the decision is to maintain interest rates and the euro weakens then we may see a new downward turn for the exchange rate and that is why we will prefer sell positions this week.


USDCAD (US Dollar – Canadian Dollar)

Bullish was the last week for USDCAD, as it closed at 1.3584 and closed at 1.3639. Two opposing forces defined the Canadian dollar. The Canadian dollar strengthened due to higher oil prices, which continued its upward rally for another week, but negative developments for the Canadian dollar appear to be the most decisive factor. The Bank of Canada left interest rates unchanged at 5% on Tuesday, and although markets had expected this, it negatively affected the country’s currency. This negative development becomes even stronger when you consider that there is an increased likelihood that by the end of the year, the Fed will raise interest rates again. The rest of Canada’s economic news was not bad as both the PMI index strengthened but also the labor market showed an unexpectedly improved picture. The trend for the USDCAD continues to be bullish and there is room for a further rise to the price range of 1.3850 which is the next resistance. We may try buy positions for one more week.


USDCHF (US DollarSwiss Franc)
The USDCHF had an upward course last week as the opening price was at 0.8848 and the closing price was at 0.8929. The uptrend for the exchange rate continued for the eighth week in a row. It seems that the already established trend is dragging the exchange rate higher, although the closer we get to the 0.90 price range, the more likely we will see corrective pressures because there will appear several sellers who want to secure profits. Switzerland’s economy grew 0% in the second quarter of the year and that created concerns because it was well below 0.3% in the previous quarter and below the 0.1% that markets predicted. Unemployment, however, remained unchanged at 2.1% and foreign exchange reserves fell slightly. We will prefer buy positions for one more week.


AUDUSD (Australian Dollar – US Dollar)

Bearish was the last week for AUDUSD, which opened at 0.6440 and closed at 0.6374. It continued for another week or a downtrend for the pair that started about a month and a half ago with great intensity. Several factors further weakened the Australian dollar. The Reserve Bank of Australia left interest rates unchanged at 4.1% and that decision weakened the country’s currency. The speech by Philip Lowe, head of the Reserve Bank of Australia two days later was unable to bring out anything that would help the Australian dollar. The negative image of China also put some pressure on the Australian dollar as both economies are closely linked. There was a big fall in imports, exports, and the trade balance, bringing new concerns to the already existing ones. The Chinese government’s decision to ban iPhones on several government officials was even more troubling. Another aggravating factor for the Australian dollar will be the fall in commodity prices, especially gold and copper. The exchange rate is just above the critical support of 0.6350 and any breakout would make way for the next support which is at 0.6170. Sell positions is our selection for the current week.



Last week, Bitcoin was heavily bearish and closed at $25,836 with losses of 0.52%. It was the third week in a row where Bitcoin prices performed mild losses which indicates two things. First of all, there is no bullish momentum that can drag Bitcoin prices higher. Secondly, the crypto community is in a wait-and-see mode without important liquidations that could potentially cause a heavy downtrend. As per the latest developments in the crypto world, last week, Tom Emmer, a United States Representative and the Majority Whip of the U.S. House of Representatives, recently introduced an appropriations amendment aimed at limiting the U.S. Securities Exchange Commission’s (SEC) allocation of funds for digital asset enforcement activities. Emmer voices his concerns about SEC Chair Gary Gensler, accusing him of exceeding his authority and suggesting that this has adverse consequences for the American populace. Emmer calls upon Congress to employ established mechanisms and appropriate procedures to prevent any potential mishandling of taxpayer funds by Gensler and the SEC. Besides the SEC and the upcoming regulation issues, Coinbase CEO Brian Armstrong engaged in a conversation about cryptocurrencies with CNBC. During the discussion, Armstrong touched upon topics such as the regulatory landscape in the United States, the company’s plans for international expansion, the growing acceptance of cryptocurrencies in the U.S., and the advantages of a cryptocurrency spot exchange-traded fund (ETF) market. In any case, the Bitcoin ETF applications are still pending without any visible short-term solutions. Brian Armstrong anticipated that the United States would align its regulatory framework with that of other G20 nations. The price zone of $24,750 remains critical for Bitcoin but since there’s still a distance for this level, we’re keen to try short positions for one more week.



The information in this report is of a general nature only. It is not a piece of personal financial advice. It does not take into account your objectives, financial situation, and personal needs.

a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.

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