Coming Up: US trade deadline, Fed minutes, UK May GDP

Welcome to an overview of the key market events to watch for in the upcoming week starting on Monday 7 July. The week ahead is set to be packed with significant economic and political events that could impact various markets.

Starting with the US trade deadline scheduled for Wednesday 9 July, the European Union is currently engaged in talks with the US to potentially reach an agreement on tariffs before President Donald Trump’s deadline. While the UK and Vietnam have already established agreements with the US regarding reciprocal tariffs at varying levels, the EU is still in negotiations. If no agreement is reached by Wednesday, Trump has threatened to impose hefty tariffs on imports from Europe. The announcement of these tariffs back in April initially unsettled the market, but things stabilized after the levies were put on hold, leading to record highs in benchmark indexes like the S&P 500 and Nasdaq. The looming question now is where tariff rates will land post-deadline and how the market will react.

In contrast, the currency market has not shared in the equity market’s optimism, with the US dollar notably weakening due to the ongoing trade war initiated by Trump. The euro, on the other hand, has benefited from the dollar’s decline, showing gains against the greenback since April. The EUR/USD pair, in particular, has been on an upward trajectory, potentially moving towards resistance levels as long as it maintains its current trend and support levels.

Moving on to the US Federal Reserve minutes set to be released on the same day as the trade deadline, these minutes are expected to shed light on the Fed’s thoughts following their decision to maintain interest rates at the June meeting. Investors are particularly interested in the Fed’s outlook on inflation, considering the concerns that inflation may accelerate in the latter part of the year, potentially affecting growth. The minutes could also have implications for gold prices if the dollar continues to weaken amidst fears of stagflation. Gold has been range-bound since April, struggling to break resistance levels, although a flight to safety driven by concerns about inflation could give gold prices a push towards previous highs.

Lastly, the UK’s GDP data for May is scheduled for release on Friday 11 July. Despite relatively weak economic growth in the UK, the pound has seen strength against the dollar. With the UK having secured a trade deal with the US, there is reduced risk in the market. Although there was a slight dip in the pound’s performance due to recent political events, it remains on an uptrend, with potential to climb further if certain support levels hold. However, there is also the possibility of a reversal in trend, as indicated by key momentum indicators.

In conclusion, the week ahead is packed with economic and political events that could significantly impact various markets, from trade negotiations to central bank minutes and economic data releases. Investors will be keeping a close eye on developments to gauge their potential implications on market movements.