The trading week ahead marks the official start of the second half of 2026.
Following a weaker-than-expected U.S. June non-farm payrolls report last week, pressure on the Federal Reserve to raise interest rates has eased somewhat. The U.S. dollar index recorded its largest weekly decline since April, aiding gold in halting a four-week consecutive slide. U.S. stock markets closed the week higher, with the Dow Jones Industrial Average reaching a new all-time high.
Key focal points for the first trading week of the second half include the Federal Reserve's meeting minutes, the ongoing impact of OPEC+ production increases, movements in the Japanese yen, and the Reserve Bank of New Zealand's interest rate decision.
Federal Reserve Meeting Minutes – Thursday, 02:00
The first Federal Reserve meeting under the new chairmanship delivered a hawkish signal, prompting a broad market shift towards expectations for rate hikes. However, the concise meeting statement lacked detailed insights, making the upcoming minutes crucial for markets to discern the varying stances among policymakers.
Following the non-farm payrolls data, the internal debate at the Fed regarding whether to raise rates is likely to intensify. Current interest rate markets show a slight decrease in bets for a September hike, though expectations remain around 60%.
U.S. Economic Data and Equity Markets
Key U.S. economic data releases this week include the June ISM Services PMI on Monday, the May trade balance on Tuesday, and weekly initial jobless claims on Thursday.
Technology stocks have been consolidating near highs over the past month, with semiconductors and memory sectors experiencing significant pullbacks for two consecutive weeks. Concurrently, sectors such as healthcare, industrials, and financials have attracted capital inflows. This healthy sector rotation, coupled with the robust state of the U.S. economy, increases the likelihood of a broader market advance.
The peak of the Q2 earnings season in late July is highly anticipated, though the strong performance in Q1 has undoubtedly raised investor expectations.
OPEC+ Continues Production Increases, Weighing on Oil Prices
As international oil prices fell for a fourth consecutive week, dropping to pre-conflict levels, OPEC+ decided on Sunday to continue increasing production by 188,000 barrels per day in August. Since April, the group has raised its production quota by nearly 800,000 barrels per day. However, due to infrastructure damage and export constraints, this figure remains largely on paper.
Nevertheless, with geopolitical tensions easing, the crude oil market may return to a state of oversupply. On one hand, market supply has been gradually increasing since June, particularly from non-OPEC countries like the U.S. On the other hand, demand from Asian buyers remains subdued. The key factor influencing short-term oil price movements, however, will be the transit situation in the Strait of Hormuz.
Japanese Yen Falls to 40-Year Low
The Bank of Japan's rate hike in June was insufficient to alleviate pressure on the yen's depreciation. Last week, the yen fell to a 40-year low of 162.57. Investor concerns that Japan's substantial new fiscal spending could worsen its fiscal health pushed the yield on 10-year Japanese Government Bonds to a 30-year high, providing another reason to be bearish on the yen beyond inflation and economic factors.
Reports suggest the Bank of Japan may adjust its intervention strategy, shifting from prior warnings to "precise surprise attacks" to increase the cost of shorting the yen. While such measures could provide a temporary boost to the yen, without accompanying hawkish rate hikes from the central bank, bearish positions on the yen may be difficult to reverse, and the USD/JPY pair could continue its volatile upward trend.
Reserve Bank of New Zealand Interest Rate Decision – Wednesday, 10:00
The Reserve Bank of New Zealand is widely expected to raise interest rates by 25 basis points this week, with markets pricing in the potential for one or two more hikes before year-end. A "hawkish hike" could temporarily boost the New Zealand dollar and cause the AUD/NZD pair to retreat from its 13-year high.
XAUUSD Gold 4-Hour Chart
As shown in the chart, gold capitalized on the dollar's post-NFP decline to close the week higher, forming a bullish engulfing candlestick pattern. This halted a four-week losing streak, establishing a potential new low and a base formation around the 3940 level.
The chart indicates that gold continued to challenge the 4200 level at Monday's open. The 4200/40 zone is the primary target for bulls, but it presents significant resistance, and a breakout may require prolonged consolidation.
If the price retreats without breaking below the 4100 support level, opportunities for buying on dips could be considered. Conversely, a successful breakout would open the path for further gains, with bullish targets shifting to 4300 and the previous high near 4380. However, sustained U.S. dollar strength is likely to limit the extent of any gold rally.
HK50 Hang Seng Index Daily Chart
The Hang Seng Index (HK50) is showing signs of an oversold rebound on both daily and weekly timeframes. Given its previous underperformance relative to Japanese, South Korean, and Western markets, a short-term catch-up rally is possible. As the chart illustrates, the initial upside resistance to watch is the 24200 level, corresponding to the 38.2% Fibonacci retracement of the decline since May. A break above this level would solidify the rebound momentum.
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