Week Ahead: US500 bulls set to charge 6700?
- FXTM’s US500 ↑ almost 13% YTD
- Index supported by bets around further Fed rate cuts
- US PCE + Fed speeches = fresh volatility?
- US PCE forecasted to move US500 ↑ 1.1% or ↓ 1.2%
- Technical levels: 6700, 6600 and 6550
The week ahead is packed with high impact data, Fed speeches and an address by US President Donald Trump:
Monday, 22nd September
· CN50: China loan prime rates
· EU50: Eurozone consumer confidence
· GBP: BOE Governor Andrew Bailey speech
· US500: New York Fed President John Williams, St. Louis Fed chief Alberto Musalem speech
Tuesday, 23rd September
· GER40: Germany HCOB manufacturing PMI, services PMI
· SEK: Sweden rate decision
· UK100: UK S&P Global manufacturing PMI, services PMI
· US500: S&P Global manufacturing PMI, services PMI
· Trump speech at UN General Assembly
Wednesday, 24th September
· AUD: Australia CPI
· JPY: Japan S&P Global manufacturing PMI, services PMI
· GER40: Germany IFO business climate
· TWN: Taiwan industrial production
· US500: San Francisco Fed President Mary Daly speech
Thursday, 25th September
· CHF: SNB rate decision
· JPY: BOJ meeting minutes
· US500: US GDP, jobless claims, durable goods, Fed speeches
Friday, 26th September
· EUR: Eurozone inflation expectations
· JPY: Japan Tokyo CPI
· SG20: Singapore industrial production
· US500: US PCE price index, personal income and spending, University of Michigan consumer sentiment
Our focus falls on FXTM’s US500, which has gained almost 13% year-to-date.
US equities rallied on Thursday, with all four major benchmarks closing together at fresh highs for the first time since November 2021!
And further upside could be on the table amid expectations for further rates cuts after the Fed lowered rates for the first time this year.
Here are 3 factors that could trigger significant moves:
1) US August PCE report
The Fed’s preferred inflation gauge – the Core PCE will be the first major data on prices following the Fed’s rate cut.
This report may attract extra attention after Powell expressed concerns over tariff-driven inflation pressures during the Fed meeting.
Markets are forecasting PCE deflators to remain unchanged at 3.9% YoY in August while the MoM is seen cooling 0.2% compared to 0.3% in the previous month. Ultimately, signs of cooling price pressure may reinforce bets around lower US interest rates.
Traders are currently pricing in a 90% probability of a 25-basis point cut by October with the odds of another rate cut by December at 78%.
US500 is forecasted to move as much as 1.1% or decline 1.2% in a 6-hour window post release.
- The US500 may slip below 6600 on signs of rising price pressures in the United States.
- A cooler-than-expected PCE report could elevate the US500 toward 6700.
2) US Global PMIs + Fed speeches
Before the key PCE report on Friday, high impact data earlier in the week may provide fresh insight into the health of the US economy.
Speeches by various Fed officials could also offer some clues on future policy moves.
Tuesday 23rd September - S&P Global manufacturing PMI
Note: US500 is forecasted to move 0.5% up or down 0.8% in a 6-hour window after the US manufacturing PMI report.
Thursday 25th September - US Q2 GDP (third estimate), jobless claims
Note: US500 is forecasted to move 0.4% up or down 0.8% in a 6-hour window after the US GDP report.
- Should overall data support the case for lower US rates, the US500 may venture higher.
- If the data impacts bets around lower Fed cuts, this may weigh on the US500 index.
3) Technical forces
The US500 is firmly bullish on the daily timeframe with prices trading above the 50, 100, and 200-day SMA. However, the Relative Strength Index (RSI) signals that prices are heavily overbought.
- A solid weekly close above the 6650 level may open the doors toward 6700 and 6750.
- If prices slip below 6600, this may trigger a selloff toward the 6550 and 6500.
