Gold, Euro, USD, Yen Await Fed, ECB & BoJ; Big Tech Earnings Eyed

Market outlook:

• interest rate decisions By the Federal Reserve, the European Central Bank and the Bank of Japan will take the spotlight next week
• US second quarter gross domestic product June report PCE Other key data in the economic calendar
• Investors will also be interested in earnings season, as Microsoft, Alphabet and Meta will report their results in the coming days.

Most read: Euro Outlook: The path of EUR/USD and EUR/GBP is linked to the Fed and ECB’s policy outlook

Volatility is likely to increase sharply across the markets in the coming week, as several major central banks are expected to announce decisions on interest rates.

Focus first on Federal ReserveThe Federal Open Market Committee is expected to raise borrowing costs by 25 basis points to 5.25%-5.50% at the close of its July meeting on Wednesday. Investors have already ruled out the move, so the focus will be on future guidance.

If the Fed maintains a hawkish bias and continues to signal that more work is needed to restore price stability, interest rate expectations will drift higher, strengthening the US dollar and creating a negative backdrop for gold prices and risky assets, such as stocks.

Go to European Central BankThe Christine Lagarde-led institution is also expected to offer a quarter-point increase, but may appear noncommittal about further tightening, given deteriorating growth in the eurozone. If this scenario continues, the euro could be at risk of a sharp bearish reversal.

As for Bank of JapanThe monetary authority is expected to keep its policy settings unchanged, but may hold initial talks about changing the yield curve control program sometime later in 2023 if inflation continues to rise on a sustainable basis.

If the Bank of Japan’s guidance indicates that policymakers are preparing to withdraw some easing in the near future, the yen could see a strong rally, but if the policy outlook remains too pessimistic and does not indicate a change in course, the Asian currency could take a hit for higher yields.

Apart from major central bank decisions, there are other important events in the economic calendar, such as US GDP report for the second quarter and personal consumption expenditures data for June. Both releases can help traders assess the health of the US economy, as well as the path of inflation, with higher-than-expected results supporting additional Fed tightening.

Major market events next week

source: DailyFX Economic Calendar

Last but not least, traders should also pay attention to the ongoing earnings season. Some of the largest technology companies by market capitalization are expected to report quarterly results, including Microsoft, Alphabet and Meta For example but not limited to. Check out the DailyFX earnings calendar for a more complete list of the top companies reporting revenue and earnings per share in the coming days.

This year, stocks of technology companies have risen and re-rated sharply on the back of the artificial intelligence craze. To justify premium valuations and maintain their performance, these companies will need to demonstrate earnings flexibility and the ability to expand their margins while increasing their top and bottom line, otherwise they could be in for a rude awakening.

Fundamental and technical forecasts

GBP Outlook: Outlook diverges between GBP/USD and GBP/JPY

The British pound turned lower against a range of currencies this week after inflation data missed expectations, but the GBP/JPY rose on Friday.

Australian Dollar Outlook: AUD/USD is sinking but the US dollar may be the key

The Australian dollar struggled to make gains despite the strong domestic data as the US dollar machinations continue to bounce across the markets. CPI is ahead. Will it reach AUD/USD?

Japanese Yen Forecast: USD/JPY, EUR/JPY at the mercy of the intervention debate

The yen’s weakness continued this week and was met with comments from Japanese officials about possible intervention in the currency market ahead of the “central bank week”. At what point will Japanese officials get involved

Gold and Silver Price Forecast: XAU/USD and XAG/USD Uncertain As Gains Fade

Gold and silver prices disappointed traders as these precious metals gave up their bullish advance. Does this undermine the XAU/USD and XAG/USD forecasts for the next week?

Crude Oil Outlook: Prices are supported by oil fundamentals as the FOMC looms

Crude oil prices are looking forward to US economic data to determine the direction of this week after the fourth consecutive positive close for WTI.

Euro Outlook: The path of EUR/USD and EUR/GBP is linked to the Fed and ECB’s policy outlook

There are many high impact events on the economic calendar next week, but the main catalysts for EUR/USD and EUR/GBP will be the Federal Reserve and European Central Bank monetary policy announcements.

USD Outlook: Will Powell Halt The Recently Recent USD Rally?

The US dollar trimmed a large part of the selling in July as G7 currencies weakened broadly. Will Powell leave the door open for further hikes or acknowledge progress on inflation?

S&P 500 and Nasdaq 100 Forecast: Overly Optimistic Sentiment Possess Slight Downside Risk

US stock indices continue to make new year-to-date highs in a reversal of the bullish trend. However, extreme optimism, overbought conditions, and crowded positions present slight setback risks, especially if earnings disappoint.