The Week Ahead: US Inflation, Oil Outlook, and Q2 Earnings Season

It’s a crucial and important week for investors in the financial markets to determine the course of monetary policy in the United States. US jobs data indicated that the US economy added 209,000 jobs during June, a lower reading than the previous 306,000 jobs. This marks the labor market’s slowest pace since the end of 2020. The unemployment rate fell to 3.6%, while the wage rate rose slightly to 0.4%. As for private sector jobs, the US economy more than doubled as expected. This was the largest monthly increase since July 2022. Annual wages also rose to 6.4%.

 

The Fed minutes indicated the difficulty for policy makers to decide on interest rates, as some members favored raising interest rates at the last meeting. However, the final decision was to hold interest rates temporarily at current levels, with most members confirming that economic data will determine the pace of interest rate hikes.

 

Investors are awaiting CPI data in the United States, where expectations indicate that inflation will decline to 3.1%, lower than the previous reading of 4%. If the expectations are correct, this indicates that both price and jobs data have declined significantly, which may push the Federal Reserve to fix interest rates again temporarily and study the economic data for a longer period of time.

 

Oil prices rose last week by around 4% after Saudi Arabia and Russia announced a new production cut of about 5 million barrels per day, as a result of continued concern about demand and expectations for performance in the second half, which are not yet clear.

 

The Dollar Index gave up important support levels near 102.4, which provided a bearish sentiment to prices as a result of the weak labor market data that may affect the Federal Reserve's decisions on raising interest rates.

 

Gold is still stable between $1936 levels as resistance and $1900 levels as support, and we will watch to see if prices succeed in surpassing $1936 levels, which they tried to cross several times before.

 

Finally, this week marks the start of earnings season, with some of the largest US banks, including JP Morgan, Wells Fargo, Citigroup and BlackRock set to report. These results will provide a clearer picture of the health of the US economy.

 

 

 

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