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The EURUSD exchange rate has gained strength, rising above the 1.0950 resistance level with the potential to push toward 1.1139. Volatility is expected this week as markets anticipate the release of FOMC minutes, which could provide clues on the Federal Reserve's monetary policy direction. The Jackson Hole Symposium, starting Thursday, will be closely watched, with Federal Reserve Chairman Jerome Powell's speech on Friday expected to signal potential future rate cuts.

Economists predict Powell may hint at lowering borrowing costs, following the FOMC’s decision to hold rates steady last month. This contrasts with the Bank of England and the European Central Bank, both of which have started cutting rates as inflation declines. Investors are paying close attention to central banks' policy divergence, particularly as markets continue to expect rate cuts from the US Federal Reserve.

Iron ore prices have dropped to their lowest level since 2022 due to global oversupply concerns, with Singapore iron ore futures falling below $94 per ton. China's steel production fell 9% year-on-year in July to around 83 million tons, as the country's economic slowdown and prolonged real estate crisis have weakened steel demand.

Iron ore, one of the biggest declining commodities this year, has seen its benchmark price drop nearly one-third, with Chinese steelmakers like China Baowu Steel Group issuing industry crisis warnings due to the sharp fall in product prices. The downturn in iron ore prices has hit mining stocks hard, with BHP Group's shares falling over 20% in the Australian market this year. Steelmaking materials futures also dipped 2.6% to $93.20 per ton at one point, marking the lowest price since November 2022.

The U.S. Department of Justice is considering breaking up Google after a landmark ruling by a U.S. District Court found the company to have monopolized the online search market. This is the first time in two decades that Washington is exploring the possibility of dismantling a major company for illegal monopolistic practices. Although analysts believe the idea of a breakup is far-fetched and expect Google to appeal, the process could take years to resolve. The ruling is not expected to disrupt Google's operations in the near term.

While the Department of Justice has yet to announce specific remedies, hearings could take place in the coming months. Analysts believe it is unlikely that major tech companies' business models will be dismantled, though stricter scrutiny on mergers and acquisitions is expected. Despite the regulatory pressures, Google's valuation remains moderate, with analysts projecting a 15% upside potential. However, the regulatory environment for the tech sector is expected to intensify over the next year, creating a lingering background risk for the industry.

Spot gold surged by 1.5%, closing at $2,472.25 per ounce, its highest level since August 2, driven by a significant influx of safe-haven funds amid escalating geopolitical conflicts. Israeli military operations continued near Khan Younis in southern Gaza, despite international efforts to secure a ceasefire and prevent a broader regional conflict involving Iran. Concerns are rising that Iran and its proxies might retaliate against Israel within the next 24 hours. The U.S. has stated its readiness to respond to any major attacks. The escalation of conflicts in the Middle East and Ukraine has heightened investor fears of a broader war, reinforcing gold's status as a safe-haven asset.

In addition to geopolitical tensions, market focus this week is on U.S. inflation data and the possibility of a Federal Reserve interest rate cut in September. The market expects the U.S. July CPI year-on-year growth to decrease from 3% to 2.9%, with core CPI potentially falling from 3.3% to 3.2%. If U.S. inflation comes in lower than expected, gold prices could reach new record highs.

Data released by Germany's Federal Statistical Office showed that the number of bankruptcies among German companies surged by nearly one-third compared to the previous year, claims totaling approximately 3.4 billion euros. This significant increase highlights growing economic challenges in Germany, exacerbated by the Russia-Ukraine war, which disrupted the country's natural gas supply and led to economic stagnation. The German economy unexpectedly contracted in the second quarter, with the European Commission predicting minimal growth of just 0.1% for the year. The German Chamber of Commerce and Industry has warned that corporate bankruptcies may surpass 20,000 for the first time since 2017, calling for urgent measures to reduce energy costs, taxes, and bureaucratic hurdles.

Germany's economic outlook has deteriorated further, with business confidence and industrial production both weakening. The IFO Business Climate Index fell below expectations in July, while the PMI dropped significantly, indicating a tougher-than-expected recovery from prolonged economic stagnation. Weaker-than-expected foreign demand, particularly from key trading partners like the United States and other EU countries, has added pressure on Germany's export-driven economy. As a result, the country's trade surplus narrowed more than anticipated, further underscoring the challenges facing Europe's largest economy.

Discover the latest forex market volatility and how the US dollar, Canadian dollar, and Japanese yen are reacting.

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The potential reintroduction of tariffs by a Trump administration poses a significant threat to Europe’s economic outlook, according to analysts at Capital Economics. Key industries such as automotive manufacturing and machinery, which are heavily reliant on exports to the United States, could face increased costs and reduced competitiveness. This could result in lower demand for European products in the U.S. market, potentially leading to decreased output and substantial job losses in these sectors.

The broader economic impact could include a slowdown in GDP growth and diminished investor confidence across Europe. The uncertainty surrounding trade policies may lead to reduced or delayed investments in European industries, further hampering economic recovery. Additionally, the European Central Bank might TV struggle with inflationary pressures arising from higher import costs.

OPEC+ is grappling with the challenge of maintaining a $75 oil price floor. Although Saudi Arabia, Russia, and other oil-producing nations might sustain this price level for a short period, doing so until the end of 2024 and beyond seems challenging. Currently, Brent crude is testing the $75 per barrel level, and despite OPEC+'s agreement to gradually increase oil supply from October, market conditions are not aligning with their expectations. On August 5th, Brent crude dropped to $75.05 per barrel, the lowest since early January. The increase in oil production from non-OPEC countries and higher-than-quota production from OPEC+ members like Russia and Iraq further complicate the situation.

As the Northern Hemisphere summer ends, seasonal demand for oil is expected to decrease, coinciding with OPEC+'s plan to increase supply, which may lead to an oversupply and a potential struggle to maintain the $75 price level. Delaying production increases could be a strategic move to protect this price. Looking ahead to the first half of 2025, even with strong oil demand growth, OPEC+ may face difficulties in increasing production and might need to consider further adjustments. Overall, while the $75 oil price might be sustained temporarily, it is unlikely to be a long-term scenario.

The price of three-month copper on the London Metal Exchange (LME) fell by 1.47% to $8,790 per ton. This decline not only reversed the gains of the previous trading day but also dropped to a more than four-and-a-half-month low. This price trend indicates an increasing pessimism in the market regarding copper prices. The London copper futures market has faced downward pressure, mainly influenced by the strengthening of the US dollar.

The global increase in copper prices has encouraged more exports, and the narrowing gap between the two markets will attract more cargo flows this month. The recent decline in the prices of precious metals like gold has also put pressure on copper. This view reflects that market sentiment fluctuations are not limited to a single commodity but create a ripple effect throughout the entire commodity market.

Japan's stock market surged, leading Asian markets and recovering some of the losses from the global sell-off that wiped out billions from markets worldwide. Japan's two main stock indices rose nearly 11% at one point after plunging over 12% the previous day, while South Korea's KOSPI index increased by more than 3%. The yen initially fell by 1.5% before recovering some losses, though it remains up 11% this quarter due to expectations of further interest rate hikes by the Bank of Japan.

In the bond market, bond yields rose across Asian markets, with the benchmark 10-year yield climbing 5 basis points to 3.84%. S&P 500 and Nasdaq 100 futures rose during Asian trading hours following a significant drop over the past few days. Oil prices rebounded due to the shutdown of Libya's largest oil field, shifting attention back to the Middle East.

Global stock markets plunged and bond prices surged due to growing concerns about a potential US recession. Investors fled risky assets, causing significant drops in US stock futures, with Nasdaq futures down 2.27% and S&P 500 futures falling 1.41%. Asian markets were hit particularly hard, with Japan's Nikkei shedding 5.5% and reaching seven-month lows. The bond market rally saw the 10-year US Treasury note yield drop to 3.723%, the lowest since mid-2023, reflecting expectations of aggressive interest rate cuts by the Federal Reserve.

Currency markets reacted to the changing interest rate landscape, with the US dollar weakening against major currencies, while the euro held steady at $1.0920, and the Japanese yen strengthened to 144.99 against the dollar. Oil prices saw a slight rebound from eight-month lows, with Brent crude rising by 27 cents to $77.08 a barrel, although demand concerns continued to weigh on the market. The MSCI's broadest index of Asia-Pacific shares outside Japan fell 2.0%, and European futures also pointed to a lower open, highlighting the widespread impact of recession fears on global financial markets.

Worried about the economy? The U.S. dollar weakened, the Yen strengthened, and Bitcoin dropped sharply.

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On this day 14 years ago, Bitcoin was priced at just $0.05, a stark contrast to its current market value of over $60,000 per coin. Back in 2010, Bitcoin was still an emerging technology known mainly to tech enthusiasts, and its future seemed uncertain. Today, it stands as a major financial asset with widespread adoption, traded on major exchanges and accepted by numerous businesses. The cryptocurrency’s rise from its modest beginnings to its current valuation highlights its phenomenal growth and the increasing mainstream acceptance of digital assets.

Currently, Bitcoin is experiencing some volatility. After reaching an all-time high of $73,798 in March 2024, the price has recently dropped to around $54,770, marking a weekly decline of approximately 12%. This downturn follows a period of high interest and significant inflows into U.S. Bitcoin ETFs, which have seen nearly $18 billion in net inflows since their inception. The market has also seen substantial liquidations of bullish crypto positions, reflecting ongoing adjustments in the cryptocurrency and trading environment.

Asian currencies mostly strengthened as Federal Reserve Chairman Jerome Powell indicated that a 25-basis point rate cut in September is possible if inflation and labour market data continue to improve, with even a 50-basis point cut being a possibility. The US dollar fell sharply due to this rate cut expectations. The Japanese yen was particularly strong, influenced by the Bank of Japan's rate hike and potential further hikes, with the USD/JPY exchange rate falling below 150 yen, reaching a five-month high. Meanwhile, manufacturing PMI data showed a continued slowdown in the Chinese economy, causing the yuan and the Australian dollar to lag behind.

Economic uncertainty in China weighed on the yuan and the Australian dollar, with the USD/CNY exchange rate rising by 0.15% and the AUD/USD exchange rate falling by 0.2%. Additionally, the prospect of a US rate cut boosted other Asian currencies, with the USD/KRW down 0.4% and the USD/INR pulling back from historical highs seen on Wednesday. Despite Australia's trade surplus data exceeding expectations, the positive impact on the Australian dollar was limited.

Spot gold and international oil prices surged sharply after reports that Hamas leader Ismail Haniyeh was killed in an attack in Tehran. This event has heightened concerns over geopolitical tensions, causing gold prices to rise more than $10, reaching a one-week high of $2418.10 per ounce. U.S. crude oil also saw a significant rebound, increasing by about 1.32% to $75.75 per barrel, recovering most of Tuesday's losses.

Hamas has attributed the attack to Israel, claiming the death of their leader, Ismail Haniyeh. The Iranian Revolutionary Guard confirmed his death, stating he was killed while attending the inauguration of Iran's new president. Iran is investigating the assassination and will announce the results soon. The escalating geopolitical tensions in the Middle East over the past 24 hours are expected to continue supporting gold and international oil prices.

The financial markets are anticipating the Bank of England's upcoming interest rate decision, with expectations leaning towards a rate cut despite the UK economy's forecasted recovery over the next two years, which could stoke inflationary pressures. The GBP/USD exchange rate has been experiencing a volatile downward trend, with further potential to test the support level around 1.2750 amid increasing bearish sentiment.

In the macroeconomic landscape, the UK's inflation rate has aligned with the central bank's 2% target, but unemployment rates are on the rise. Service sector prices remain elevated, exacerbated by a 9.8% increase in minimum wage this April. Additionally, the Federal Reserve's interest rate decision is also approaching, with expectations to maintain the current rate. However, there might be a potential rate cut in September if inflation continues to decrease.

Earnings Expectations High as Pfizer Navigates Post-COVID Revenue Landscape

Pfizer (PFE.US) will announce its second-quarter earnings on Tuesday, July 30th, with its earnings per share having exceeded market expectations for the past four quarters. As the impact of the pandemic fades, revenue from COVID-19 drugs has rapidly declined, presenting a core growth challenge for Pfizer. Investors are focusing on Pfizer's core products, especially the performance of its oncology and vaccine products, excluding COVID-19 drugs.

Pfizer is also advancing the development of a weight loss drug, danuglipron, aiming to enter the multi-billion-dollar weight loss market. The company announced that, after overcoming scientific hurdles in a small study, the once-daily oral weight loss pills will enter mid-stage research in the second half of this year. If successful, it will move into the final stage of development. Analysts predict that by the end of the decade, sales of weight loss drugs will reach $130 billion. This year, Pfizer's stock price has risen nearly 12%, though it still lags behind the S&P 500 index's more than 14% increase.

This week's forex market saw major currency pairs react to economic data and global events. For insights on USD, JPY, GBP, EUR, CAD, and BTC trends.

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Trump's proposed tariff policies, which include a 60% tariff on Chinese goods and a 10% tariff on goods from other countries, could significantly affect US inflation. Analysts estimate that these tariffs would increase the price level by 1.8% over two years, raising the inflation rate by 0.9 percentage points annually. This estimate assumes no secondary effects and is based on the fact that Chinese exports to the US constitute about 1.5% of GDP and global exports make up about 12% of US GDP.

Historical context reveals that, following the US-China trade war, average US tariffs rose to 19.3% on Chinese goods and 3% on others, making the proposed 60/10 tariffs a substantial increase. The primary risk lies in potential secondary effects, such as businesses passing on higher costs to consumers or supply chain disruptions, which could exacerbate inflation and create a negative supply shock.

Following a major sell-off in tech stocks, the S&P 500 Index experienced its biggest one-day drop since December 2022, breaking a record that had stood since the 2007 financial crisis. For the past 356 trading days, the index hadn’t fallen by more than 2% in a single day, marking the longest stretch in 17 years.

Since hitting a low in October 2022, the S&P 500 has gained $17 trillion in market value, making it one of the best performances this century, second only to 2021. However, this year, the index has fluctuated by at least 1% on only 25 of 141 trading days, indicating reduced market volatility.

Despite ongoing tech stock rotations, the sharp market swings reveal deeper concerns. Investors are worried that the rapid growth of artificial intelligence over the past year may have created a bubble, contributing $9 trillion to the S&P 500. Now, this bubble seems at risk of bursting.

In Q2 2024, Alphabet, Google's parent company, exceeded expectations with revenue of $84.74 billion. The cloud business, viewed as Google's next growth engine, reported $10.35 billion in revenue, a 29% year-over-year increase. However, advertising revenue grew more slowly, reaching $64.6 billion, with YouTube's ad revenue falling short at $8.66 billion. Concerns have arisen due to increasing AI-related capital expenditures, which amounted to $13.2 billion in Q2, up from $12 billion in Q1, potentially affecting profit margins.

Following the earnings report, Google's stock initially rose but ended down 2% after hours. Despite this, Google's stock has risen 32% year-to-date. Most analysts remain optimistic about Google's future, emphasizing the importance of continued focus on AI and maintaining competitiveness in the advertising sector. However, some caution against potential risks, including an antitrust lawsuit from the US Department of Justice, the upcoming US presidential election, and extensive capital expenditures related to AI investments.

Crude oil prices have declined, hitting a support level at $77.35 with potential further support at $73.50. Prices fell after President Biden announced he would not seek a second term, and investors weighed the potential for global demand changes and rate cuts in September.

The Federal Reserve's upcoming policy review could impact oil prices, especially if rate cuts are delayed, possibly leading to a recession
and higher borrowing costs, reducing oil demand. OPEC+ production cuts and China’s slower economic growth are also influencing oil prices, if oil drops below $70, OPEC may need further policy changes, having previously targeted $80 for US oil.

At the start of the new week, U.S. President Biden announced his withdrawal from the 2024 presidential election, prompting investors to consider whether Biden's decision to end his re-election campaign and support Vice President Harris increases or decreases Trump's chances of regaining power.

The market generally favours those perceived to benefit from Republican Trump’s advocacy of looser fiscal policies, higher trade tariffs, and weaker regulations. This is reflected in support for the dollar, rising U.S. bond yields, and increases in banking, healthcare, energy stocks, and Bitcoin.

Investors now face the question of whether to stick to these trades, given that Biden has abandoned his re-election bid. The market may experience volatility as traders watch to see if Harris can secure the party nomination and build enough momentum to challenge Trump's lead in the polls. If Trump’s chances of being re-elected president increase, the dollar is expected to be boosted. Trump's preferred combination of low taxes and high tariffs is seen as stimulating inflation and interest rates, increasing the dollar's appeal. During uncertain times, demand for the dollar also rises.

This week's key economic data releases, including the Chicago Fed National Activity Index and the S&P Global PMI, will impact the FX market.

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Warren Buffett's Berkshire Hathaway recently sold around 34 million shares of Bank of America for $1.48 billion, reducing its stake but retaining over 998 million shares valued at more than $42 billion. Buffett's initial $5 billion investment in Bank of America in 2011, which included preferred stock and warrants, helped stabilize the bank post-financial crisis and boosted market confidence.

Despite the recent divestment, Buffett's strategic moves underscore his belief in Bank of America's future prospects and management team. The investment not only yielded substantial unrealized gains but also signalled Buffett's ongoing confidence in the bank's stability and potential for long-term growth. His approach highlights a commitment to disciplined investing and a strong endorsement of Bank of America's position in the financial sector.

TSMC, the world's largest contract chip manufacturer, exceeded second-quarter profit expectations due to strong AI-driven semiconductor demand. The company reported a net profit of 247.85 billion New Taiwan dollars (7.6 billion USD), surpassing Wall Street's forecast of 236.1 billion. Revenue for the quarter was 673.51 billion New Taiwan dollars, a 40% year-on-year increase, also beating market expectations.

Over the past year, due to the strong AI demand, TSMC's valuation has significantly increased. The company's American Depositary Receipts (ADRs) on the New York Stock Exchange (TSM) have a total market capitalization exceeding 1 trillion USD. TSMC is considered a bellwether in the global chip manufacturing industry because it possesses the highest advanced chip production capacity in the industry.

Currently, the company is investing billions of dollars in new production facilities in Arizona, USA, to further expand its capacity and market influence.

Amid the complex backdrop of the current global economy, the performance of the Asian bond market has garnered significant attention. In June, the Asian bond market experienced a net inflow of foreign capital for the second consecutive month, marking another positive performance. This trend is driven by both changes in the global economic environment and the robust fundamentals of various Asian economies.

The anticipation of an interest rate cut by the U.S. Federal Reserve has positively impacted the Asian bond market. Against this backdrop, data shows that in June, the bond markets of Indonesia, India, Malaysia, South Korea, and Thailand collectively attracted $3.05 billion in foreign capital.

The market attributes this recent rise in gold prices to the political uncertainty triggered by the attempted assassination of U.S. presidential candidate Trump, boosting the demand for precious metals as a safe haven. Historically, in times of uncertainty and turmoil, people have continued to turn to gold as a safe haven and store of value, and this is precisely the period we are in now.

In fact, even without the weekend's unexpected events, the current precious metals market is surrounded by bullish factors. Last week's U.S. CPI data, which showed cooling inflation, has increased the likelihood of the Federal Reserve cutting interest rates in the coming months. In a low-interest-rate environment, precious metals often attract buying interest because rising interest rates reduce the appeal of non-interest-bearing assets like gold, prompting investors to seek higher yields elsewhere.

The HK 50 index has rebounded after a correction following its breakout from a strong downtrend resistance, now trading higher with expectations to push toward a key level. The recent US inflation data, which came in lower than expected, has raised hopes for a near-term interest rate cut by the Federal Reserve, boosting property stocks in Hong Kong.

The upcoming release of China's economic growth figures and the ruling party’s meeting could positively impact the market with potential property market reforms or support. Chinese authorities have also suspended short-selling in the stock market, which might help stock prices in the coming weeks.

Against the backdrop of global economic uncertainty, gold has demonstrated strong upward momentum as a traditional safe-haven asset. Despite facing adverse factors such as high interest rates and persistent inflation, gold prices have risen by 17% this year, highlighting its appeal as a safe-haven asset.

Spot gold prices have risen for the third consecutive week, surpassing the key psychological barrier of $2400 per ounce, with expectations that prices may reach historic highs.