FX.co ★ Investors get ready for a bull market this July

Global stock markets edge higher, thanks to the Fed's decision on monetary policy and the latest economic data, particularly on inflation. The figures indicated easing inflationary pressure in the US, a fairly good scenario compared to that of Europe and the UK. Recent reports said inflation in Europe remains at high levels, while the UK shows attempts to rise again. These state of affairs directly influence the dynamics of financial markets.

Today, the US will have a short working day, while tomorrow local markets will be closed due to Independence Day celebrations. This means that investor activity will remain low, but will pick up again after important events and the release of various economic statistics.

Key data that will affect market direction includes US employment report which, with its dynamics, could convince investors that the local labor market remains strong, and therefore, based on the previously released GDP figures, it can be expected that the domestic economy will not fall into a recession. This scenario, together with the figures presented last Friday on personal consumption expenditures, personal income, and personal outlays, strengthens the chance of the Fed halting its rate hike cycle, which will fuel risk appetite. Reports on production indicators and business activity indices in China, Germany, Europe, UK and the US will also play an important role.

The June Fed minutes will not have noticeable impact on markets as Fed Chairman Jerome Powell already voiced the contents at press conferences last month and during congressional hearings.

Meanwhile, the outcome of the Reserve Bank of Australia's meeting could provide support for the local currency, especially if China releases strong Manufacturing PMI data. Markets expect the bank to raise the main interest rate to a 10-year level.

Overall, stock rally may continue this month, while dollar, driven by positive data on the US economy, will increasingly lose its positions against major currencies.

Forecasts for today:

AUD/USD

The pair trades below the resistance level of 0.6675. Positive news from China, as well as another rate hike from the RBA, could lead to a further growth towards 0.6770.

NZD/USD

The pair currently trades below 0.6150, but a consolidation above this will trigger an increase towards 0.6235.