Treasury Secretary Janet Yellen stated that the national debt of $34.7 trillion is manageable if it remains stable relative to the economy. However, high interest rates are increasing the debt burden. The 2024 budget deficit is $1.2 trillion, following a $1.7 trillion shortfall in 2023. Rising debt costs are due to the Federal Reserve's rate hikes to combat the highest inflation in over 40 years, which peaked in mid-2022. Although inflation has decreased, the Fed seeks sustained progress toward a 2% inflation target.
DOW JONES
U30USD (Daily). The Dow Jones was the only index that closed lower last week. It is currently trending sideways. An ideal buying level would be around 38000, a strong support level.
GOLD
XAUUSD (Daily). Gold traded in a tight range last week. Wait for potential breakouts from the descending triangle pattern around 2350.00 (upside) or 2290.00 (downside).
WTI
US crude oil ended a three-week losing streak by gaining nearly 4% last week, with analysts predicting a tighter market in the third quarter. Despite a slow start to the season, summer fuel demand is expected to lower inventories. Oil prices remain below the annual highs from April but have rebounded from a recent sell-off after OPEC+ announced increased production plans for the fourth quarter. The cartel is maintaining all output cuts until October and extending some reductions until the end of 2025.
WTIUSD (Daily). Despite experiencing a sharp correction and a sharp rebound influenced by fundamentals, oil movements are still within its range. It is recommended to take profit near the resistance level of 80.00.
GBPUSD
GBPUSD (Daily). Breaking the bullish line formed in 38 days with an increase of 5600 pips, this pair is expected to hit the region between the 38.2% fibo level at 1.26500 and the 61.8% level at 1.26150.
JAPAN
The Bank of Japan kept its benchmark interest rate unchanged at 0.1% on Friday and signalled a potential reduction in Japanese government bond (JGB) purchases at its next policy meeting on July 30-31. This decision was made with an 8-1 majority, with board member Nakamura Toyoaki dissenting. Toyoaki supported reducing JGB purchases but suggested waiting until after the July 31 economic activity and price outlook report to reassess the conditions.
USDJPY (Daily). More influenced by fundamental effects lately, the pair awaits further news from the central bank. Technically, the ascending-triangle pattern breaks at 158.30 (upside) or 156.00 (downside). Watch out for potential BOJ intervention if the Yen weakens too much.
Fullerton Markets Research Team
Your Committed Trading Partner
