Last week ended in a pretty explosive way after fewer jobs were added in the U.S than expected last month. Unemployment rose to 4.3%- essentially showing that the Fed has been behind the curve with interest rates and is clearly pretty late to the party- with the first cut expected in September, markets are now pricing in 100bps of cuts by the Fed in 2024- some even calling for emergency intervention.
Due to this, we saw stock markets sell-off on Friday alongside cryptocurrencies- and the Dollar weakened- pushing GBPUSD above 1.28 and EURUSD above 1.09.
It is unclear whether the Monday open will result in further selling off- we have escalations between Israel and Iran to consider, and civil unrest across the UK, which makes analysing this market pretty difficult. Generally, August is a low-liquidity month so price action is usually exacerbated, however, after a pretty busy week on the economic calendar, there are some events to take note of this week to ensure you are not caught off side when trading.
On Monday we have Services PMI from Europe, the UK and the U.S- all expected positive and over 50- showing that the services sector globally is performing well, this much is evident in spending and inflation levels. We also have a Fed speech later in the day from Daly, this could be important, as will all Fed speeches given the fact that the markets are clearly signalling that the Fed needs to cut.
On Tuesday the main event is European retail sales which is expected lower at 0.2% which could weaken off the Euro a little, the next event is U.S jobless claims on Thursday which we are expecting higher at 250k- this could also be an event which is volatile for the U.S Dollar and GBPUSD could push higher. Later on Thursday we have another Fed speech which is again something which could affect the market.
Overall this will be a quiet week from a data perspective but with geopolitical events and market uncertainty, we could still see some major moves.
