It did it
again. Inflation in the United States in July slowed down to 8.5%, lower than
forecasted by Wall Street’s 8.7%, and much lower than in June, when it hit a 42-year
high of 9.1%.
U.S.
Treasuries yields dropped, and investors had a sigh of relief. Now market
optimists have begun to test the 200-days moving average at 4179 points. The baseline
scenario suggests that the possible outcome will bring no good. Monetary tightening
of the Federal Reserve (Fed) and the deep inversion of the Treasuries yield
curve would likely damper any further upside efforts, and it may seem like
trying to put toothpaste back in the tube. It looks fascinating, but all in
all, it would hardly be successful to build up an upside trend.
However,
the real question is where is the upper margin of this uptick located. The
previous forecast suggested that a breakthrough of the 200-days moving average
would push the S&P 500 to 4250-4300 points. But the index is already there.
So, it is time to think of possible short opportunities.
So far, no
signals for a possible entry point to open short positions can be seen and
neither is the timing for such short operations right as the first half of
August could be false start for a stock market drop. However, 20% of the funds
reserved to open such short positions may look like a proper start to open
small, short positions. In this case, such cautious steps seem justified.
The oil
market situation is the most complicated story of the month. Brent crude prices moved above $100 per barrel with no reaction on
growing oil inventories in the United States, or to the International Energy Agency (IEA) and
Organisation of Petroleum Exporting Countries (OPEC) monthly report. The upside scenario with a primary target at $135-145 per barrel and
extreme secondary targets at $160-170 per barrel remains intact. However, no triggers that could move crude
prices further up can be seen at the moment.
Gold prices
continue to move to the upside as
they hit $1800-1820 per
troy ounce. It would be very
difficult for prices to surpass this level, so it is no wonder prices scaled
back to $1790 per ounce. Any long positions are very risky to be opened now. So, it is better to wait for gold
prices to show clear signs of a
reversal to open
long-term short positions in September with targets at $1350-1450 by the end of
October.
The FX market was
clearly excited by lower-than-expected July inflation figures in the United
States that were released this week. EURUSD broke through a strong resistance
level at 1.02200, and even surged above the 1.02800-1.03000 area. However, no
good positions to open a deal in any direction can be seen.
GBPUSD slowed down but
it was in the upside formation in the beginning of this week. This fact may
signal a possible correction to 1.20000. But, instead of a decline the pair
crashed the resistance at 1.20900-1.21000 on the U.S. inflation figures and jumped
to 1.22400. If you have short positions open, you could keep them open until the
pair returns to 1.20900-1.21000. In case the Cable continues to rise above
1.23000 these positions should be closed. No other good entry points for new
positions can be seen at this moment.