Forexlive Americas FX news wrap 16 Jul. The shift into the Russell 2000 and Dow continues

• Dow and S&P close at records
• I know it is just the Dow 30, but it is on pace for best % move since June 2023
• Crude oil futures settles at $80.76
• Fed’s Kugler: Will be appropriate to ease later this year if conditions evolve favorably
• There hasn’t been a better week to own the Russell 2000 in 24 years
• SocGen: The historical USD response to Fed easing cycles
• President Macron accepts French governments resignation
• Atlanta Fed GDPNow Q2 growth estimate rises to 2.5% versus 2.2% last
• European indices close lower on the day
• Gold trades to a new all-time high and backs off a bit. $2450.10 is close risk for buyers
• WSJ: Spot Ether ETF likely to start trading next week
• New Zealand global daily trade price index rises 0.4%
• Canadian CPI cements a Bank of Canada rate cut next week – CIBC
• US May business inventories 0.5% versus 0.4% expected
• US NAHB housing market index 42 vs 43 expected
• Kickstart the FX trading day for July 16 w/a technical look at the EURUSD, USDJPY & GBPUSD
• IMF leaves 2024 global growth forecast unchanged, bumps 2025 GDP
• US June import prices 0.0% vs -0.1% expected
• US June retail sales 0.0% versus -0.3% expected
• Canada June CPI 2.7% versus 2.8% expected
• Canada June housing starts 241.7K vs 255.0K expected
• US retail sales and Canadian CPI coming up next
• The EUR is the strongest and the AUD is the weakest as the NA session begins
• Forexlive European FX news wrap 16 July – German ZEW declines for the first time this year

US retail sales were better than expectations with revisions to the prior month. Ex Autos the MoM gain was 0.4% vs 0.0% estimate. The ex auto and gas was even better at 0.8% (with prior month revision to 0.3% from 0.1% estimate. Other data in the US today showed NAHB housing index was steady but not impressive. Inventories rose by 0.5% vs 0.4% estimate.

In Canada the CPI cemented the BOC rate cut next week. However, despite the stronger retail sales and and the lower CPI in Canada, you might expect the USDCAD moved higher?

It didn’t.

The USDCAD price is only down around 8 pips from the close yesterday, but it was up around 30 pips at session highs The price is trading between its 200 bar MA on the 4-hour chart above at 1.36828, and the 100 bar MA on the 4-hour chart below at 1.36583. Overall the pair’s price is still above other MAs including the 100/200 hour MA, 100 day MA, and 100 bar MA on the 4-hour chart between 1.3636 and 1.3658. Keep those levels in mind in the new trading day.

The Bank of Canada rate decision is next Wednesday.

Fed’s Kugler commented that it will be appropriate to ease monetary policy later this year if economic conditions evolve favorably. She noted that the upside risks to inflation and downside risks to jobs have become more balanced. If the labor market cools too much, cutting rates sooner rather than later may be necessary. However, she balanced that comment by saying it might be appropriate to hold rates steady a bit longer if incoming data do not show sufficient progress toward the 2% inflation target.In other words, she does not know.

Finally, despite a few bumps at the start of the year, inflation has continued to trend down, and ongoing labor market rebalancing suggests that inflation will move towards the 2% target.

In the US stock market, the Dow and the S&P closed at record levels with the Dow’s gains, its best since June 2023. The Russell 2000 had a gain of 3.5% or more for the 2nd time in 4 trading days as the market plays catch-up to the Nasdaq and S&P. The Magificent 7 wasn’t that magnificent with Meta, Nvidia, Alphabet and Microsoft all declining today . The final numbers showed:

• Dow Industrial Average average soared 742.74 points or 1.85% at 40,954.49. That is the 2nd consecutive record close.
• S&P index rose 36.40.64 percent at 5667.21. That was another record close
• NASDAQ index rose 36.77 points or 0.20% at 18509.34. The all-time high was reached last Wedsnesday at 18647.45
• Russell 2000 rose 76.65 points or 3.50% at 2263.67. It is the 2nd day in the last 4 with gains of 3.5% or more.

In the US debt market, the yield curve got more negative with yields moving lower across the curves with the longer end seeing the largest declines:

• 2-year yield 4.421%, -3.2 basis points
• 5-year yield 4.075%, -5.6 basis points
• 10 year yield 4.159% -6.9 baseboards
• 30-year yield 4.373%, -8.1 basis points

Spot gold moved to an all-time record level and record close:

• Spot gold rose $47.36 or 1.96% at $2468.90.The high-price was just above this level at $2469.74.

Spot silver rose $0.61 or 2.0% at $31.27

Bitcoin traded his eyes and $65,222. It is currently trading at $64,823 which is just above its 100-day will be average is $64,511. Staying above that level would be more bullish going forward.

Crude oil is trading down -$1.13 at $80.76. Concerns about China growth, and less regulation in the US with a Trump/Vance win is helping to weaken the price.The private crude oil inventory data showed a drawdown of oil inventories. The expectation for the EIA data is for a small change:

Finally, the strongest to the weakest of the major currencies shows the CHF is the strongest while the NZDUSD is the weakest.

The USD is mixed to higher.

This article was written by Greg Michalowski at www.forexlive.com.