Weekly Focus: FOMC Minutes and NonFarm Payrolls

This week has started with Independence Day in the United States, meaning that European investors have had to support liquidity and steer markets by themselves. However, Europeans are not likely to move markets, as they prefer to follow U.S. large investors. Thus, the market is likely to close on Monday around the level it was during Friday’s closing bell. Volatility is expected to be below average.

Within the next four trading days the major milestones of the week will be a publication of the Federal Open Market Committee (FOMC) Minutes on Wednesday followed by the NonFarm Payrolls report on Friday. Both are of paramount interest as they may give an answer to how close the U.S. economy is to a recession, and the reason behind why the Federal Reserve (Fed) hiked interest rates by 75 basis point, the biggest hike in the last 28 years.

The FOMC’s minutes are unlikely to deliver any good news for the stock market after Fed’s leader Jerome Powell repeatedly confirmed that the monetary watchdog would be bringing down inflation at any cost. So, the minutes are likely to have a negative impact on the market and the S&P 500 broad market index in particular. The negative setup for the index , with targets at 3450-3550 by the beginning of August, is intact despite closing on Friday above 3770 points, which has now become a strong support level. Therefore, a downside scenario for this week is going to be moderate. No good entry points are seen for this week.

The crude market lift-off countdown is ticking. This week is likely to be the final for Brent crude prices to soar towards $160-180 per barrel. This lift off is seen to be rather logical in the current sentiment. So, a hover around $114-115 per barrel of Brent crude is puzzling. This upside scenario could well contribute to the start of the recession and EU nations seem to be pushing for this kind of  a scenario to also become their reality. This scenario could be manifested from the ban of the insurance on oil shipments from Russia and other oil grades from non-Russian origins that contain even a minor quantities of Russian grades. This is a very strict ban that justifies crude prices upside expectations. Thus, long trades opened at $112.70 per barrel of Brent crude are intact.

Gold prices fell to $1785 per troy ounce and quickly rebounded to $1810. U.S. 10-year Treasuries yields continue to run below 3.0%, while the U.S. Dollar remains at its highs since 2017. Short trades opened at $1860-1880 are better to be kept, while traders should be prepared to close them partially at $1750-1760 per ounce. It would be better for stop-loss orders to moved downside to avoid any losses in the unlikely case of price rebound.

EURUSD is moving aggressively downside to the targets at 1.00500-1.01500 by the end of this week. The level at 1.04300-1.04500 is a strong resistance level where it might be interesting to open short trades . However, a further strengthening of the U.S. Dollar is seen fragile and questionable. Thus, short trades should be opened at small amounts.

FBPUSD has already met the aggressive downside target at 1.19500-1.20500 and is now very close to the important resistance level at 1.21300-1.21500. Some short positions at this level could be considered interesting to open. These trades are at risk as the pair has met its primary downside targets already.