01.07.2024: USD inches decrease. Intraday outlook for S&P 500, EUR/USD, Brent
The past week has highlighted two pain points for global markets – the presidential elections in the US and the situation with the leading party in France’s future parliament. Considering that the debate between Donald Trump and Joe Biden made a depressing impression on supporters of the current US president, the negativity on American stock exchanges intensified.
By Friday evening, the mass media was flooded by publications on the issue that Joe Biden lost this rivalry. Most of the articles revealed a panic mood.
Indeed, from the point of view of the largest institutional investors, Trump’s return to the White House is regarded as a real disaster. Therefore, the main stock index S&P 500 went into decline and started the new week in the red trading in the trading corridor between 5,451 and 5,524.
The US dollar also found itself in a difficult position because inflation slowed down in the United States. As May reports showed, the annual inflation rate in the American economy eased from 2.8% to 2.6%. This cemented expectations regarding the timing of a US rate cut later this year. In addition, the euro’s growth pushed the US dollar down against a basket of major currencies.
On late Friday, the US dollar also began to lose steam. The greenback carried on with its slide in the early Asian session today. The US dollar index began the first week of July falling within the intraday corridor of 105.4 to 105.7.
Meanwhile, United Europe is trying to digest the results of yesterday’s vote in France. Analysts are speculating on how this adventure of Emmanuel Macron could end. According to interim results, the far-right nationalists of the National Rally party are leading in the first round of parliamentary elections with 33% of the votes.
The far left received about 28%, and the presidential coalition “Together” is way behind with 22% of the votes. The results differ somewhat among different French media, but the numbers roughly enable the same conclusion. It is also known that the center and left parties are negotiating to keep out the majority of the far right. This campaign will end on July 7, and no one can predict its outcome now.
However, the euro is still celebrating its small victory. That is, the single European currency has grown, but in fact, it has only shifted to the upper border of a narrow trading range. But our analysts do not rule out that the euro might lose ground today.
In other words, the euro could retrace to the lower border of the range. The fact is that last week, several ECB policymakers announced the scenario of two more interest rate cuts before the end of this year.
Apparently, these comments prefaced Christine Lagarde’s speech today. If the ECB President somehow confirms these statements, then the single European currency will inevitably go down.
But the euro will hardly go beyond the corridor established today. Investors do not intend to take many risks ahead of the publication of reports on the US labor market. The government data, namely the nonfarm payrolls, will be released only on Friday.
00:00 INTRODUCTION
00:27 S&P 500
01:08 U.S. CORE CONSUMER INFLATION INDEX
01:38 USDX
01:58 FRANCE: ELECTIONS
02:58 ECB: 2 RATE CUTS
03:31 WHAT WILL LAGARD SAY?
04:04 EUR/USD
05:12 USA JOB OPENINGS
05:49 BRENT
06:31 CHINA BUSINESS ACTIVITY INDEX
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