The first half of July delivered considerable volatility across financial markets, driven by a series of pivotal events. However, investors are showing no signs of slowing down, with the upcoming week promising to be equally intense. Most notably, we await the European Central Bank's decision, which will determine whether the cycle of interest rate cuts has indeed concluded. Furthermore, a deluge of corporate earnings reports is imminent, from Wall Street giants like Alphabet, Tesla, and Intel to significant European companies including SAP, Deutsche Bank, BNP Paribas, and Volkswagen. Consequently, close attention should be paid to markets such as EURUSD, US100, and DE40 this week.
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The EURUSD currency pair has notably weakened since the start of the month, despite numerous turbulences surrounding the US dollar, including the continuation of the "trade war" and the conflict between Trump and Powell. Nevertheless, the US economy continues to present robust data. Next week will bring second-tier US data, such as new home sales (Wednesday) and preliminary PMI indices (Thursday). On Tuesday, we will also have the opportunity to hear from Jerome Powell. However, from the euro's perspective, the ECB's decision will be crucial, indicating whether the bank has indeed paused interest rate cuts in the face of rising deflationary risks. Preliminary PMI readings from the Eurozone will also be released on Thursday.
US100
US indices are trading at historical highs, with investors seemingly unfazed by tariff risks, confident in the economy's strength. Earnings season is in full swing, with profit growth projected to be the slowest in at least two years. Following Netflix's results, it is now time for other major tech companies to report: Alphabet and Tesla (Wednesday after market close) and Intel (Thursday after market close). Solid results, significantly exceeding expectations, could sustain the upward trajectory of US indices, particularly the tech-heavy Nasdaq 100, which underpins the US100 contract.
DE40
Key earnings reports from European companies are also on the horizon, potentially significantly influencing the future direction of major indices. On Tuesday before market open, SAP, the German technology company largely responsible for the gains in the German DAX in recent months, will present its results. On Thursday, we will see Deutsche Bank's results, which will illustrate how the bank is performing in an environment of lower interest rates but elevated market volatility. Finally, on Friday, Volkswagen will report, a company heavily exposed to US automotive tariffs. It is also worth noting that Thursday will feature a summit between the European Union and China, which could potentially lead to closer cooperation during the ongoing trade dispute with the US.
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