Good morning and welcome to episode 657 of ‘Talking Bull’. In this video/podcast we cover the main headlines and what to expect from the day ahead.
We take a technical look at key markets that are likely to be impacted by today’s events. Also, we participate in a ‘Gun to the head’ challenge where each of us calls a live trade. These will expire at 9pm tonight and we will keep track of the progress over time.
We hope you enjoy it!
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Joe was stopped out on Ethereum. Jamie made 2R on EURCHF and Steve was stopped on Oil.
We have included an illustration based on a £1000 account. This will follow the combined return of our morning trades by risking 1% of the trading capital per trade. The 1% risk is a variable monetary amount and will rise and fall based on the success of the calls.
We are currently up 130.20% collectively since we began recording Talking Bull on the 30th October 2019.
Euro-Zone vulnerability continues
Euro-Zone industrial sentiment dipped to 3.5 for July from 7.0 previously while the services-sector index retreated to 10.7 from 14.1 in June. Consumer confidence was also confirmed as weaker on the month with the overall business and consumer survey sliding to 99.0 from 103.5. This was below expectations of 102.0 and the weakest reading since March 2021.
US economy in a technical recession
According to the flash data, second-quarter annualised GDP data was reported at -0.9% compared with expectations of a 0.5% increase and followed a 1.6% contraction for the first quarter.
There was a small increase in consumer spending for the quarter despite dip in spending of durable goods. GDP was undermined by another sharp dip in inventories while net exports did secure a net advance for the quarter.
Technically, the US economy was, therefore, in recession for the first half of the year, although the data will inevitably be revised.
US yields declined again
Following the GDP data, market expectations over a possible 75 basis-point rate hike in September continued to fade and yields moved lower across the curve.
The 10-year yield declined to 3-month lows below 2.70% with a retreat to near 2.65% on Friday.
Dollar dips further
Although the dollar rallied into the New York open, lower yields were a significant factor undermining the dollar again after the US GDP data.
Gains in equities also undermined defensive support for the US currency with the dollar index retreating to fresh 3-week lows.
USD/JPY slumped to 6-week lows below 133.00.
Equities rally again
Wall Street indices also rallied further on Thursday as the GDP data fuelled hopes of a slightly less aggressive Fed stance on interest rates.
Global bourses, however, struggled to take advantage of US gains.
Month-end position adjustment on Friday
There will be potentially choppy trading on Friday with month-end position adjustment adding to volatility.
Most investment banks suggest that the dollar will be vulnerable to some selling pressure.
10.00: Euro-Zone consumer prices
13.30: US PCE prices index
Key events over the next week
August 1st: US ISM manufacturing index
August 2nd: Reserve Bank of Australia policy meeting
August 4th: Bank of England policy decision
August 5th: US employment report
August 5th: Canada employment report
Gun to head challenge – Update
Today’s trade idea
Have a great week everyone.