Three markets to watch next week (07.07.2023)

Summer has begun and it is usually a more quiet period on the markets. However, Wall Street earnings marathon begins next week and it may keep US indices moving. Apart from that, traders will be offered US CPI data for June, which is expected to show another slowdown, as well as Bank of Canada rate decision. Be sure to watch USDCAD, GOLD and US500 in the week ahead!

USDCAD

USDCAD could see some larger moves on Wednesday afternoon. Traders will be offered US CPI reading for June at 1:30 pm BST, which is expected to show a further drop in headline CPI as well as small deceleration in core gauge. Bank of Canada will announce its monetary policy decision an hour and a half later, at 3:00 pm BST. Economists as well as money markets expect BoC to deliver a 25 basis point rate hike. A hawkish surprise and a 50 bps rate hike is rather unlikely and should we see a surprise from BoC, it would more likely be a dovish one.

GOLD

Gold had a mixed week - precious metal gained in the first half before giving back all of the gains in the second half. Reversal on the gold market was triggered by solid US data, which triggered an increase in hawkish FOMC bets. Central banks and monetary policy expectations will likely remain a key driver for gold this week - a higher-than-expected US CPI reading could prop up USD and pressure GOLD. Also, a hawkish message by Bank of Canada would likely hint that central banks remain on a tightening track and may lead to a similar reaction.

US500

Wall Street earnings season for Q2 2023 will begin next week! As usual, earnings marathon will be launched by big banks reporting financials. Wells Fargo (WFC.US), JPMorgan (JPM.US) and Citigroup (C.US) will be among first to report results, with reports from all three scheduled to be released ahead of the Wall Street session open on Friday. Solid results could help S&P 500 resume upward moves. However, if reports show that fallout from SVB was larger than expected, things may turn sour.