The US stock market closed the last trading week in the black. The Dow Jones gained 0.7%, while NASDAQ and S&P500 grew by 1%.
On Monday morning, China's stock market saw a significant drop. The CSI300 index fell by 3%. Perhaps the reason for such a drastic decrease was the aggravation of US-China relations. Over the weekend, China imposed new sanctions against several top US officials as a response to US sanctions.
Oil is declining on Monday, following the fall of China's stock market. Brent crude costs $73.10 per barrel. Unlike the US equity market, oil failed to recoup last week's losses and did not reach its highs. So, Brent Crude is likely to enter a long-term correctional phase in the range of $70-76 per barrel.
The ECB noticed a faster recovery of the eurozone economy and raised its GBP forecasts for 21-22 years. Now, the regulator predicts a 4.7% growth in 2021 compared to 4.1% in the previous forecast. The economy is expected to expand by 4.6% in 2022.
Over the weekend, new coronavirus cases decreased slightly. Yesterday, there were only 430,000 cases. As for developed countries, yesterday, the maximum number of cases in Britain and Russia totaled 29,000 and +24,000 respectively. In countries where more than 50% of the population are vaccinated, the mortality death toll is several times lower than in countries with a low level of vaccination.
The S&P500 index is likely to trade in the range of 4,370-4,430. On Wednesday, the Fed will finally provide new comments about the monetary policy amid high inflation that reached 5.4% in June compared to last year's level. US inflation has been holding around 5% for 3 months since April. Therefore, the Fed had to take some action to combat the growing inflation. On Thursday, the US will unveil its GDP data for the 2nd quarter. Analysts expect GDP to jump by 8% and by 9 on an annual basis in the 2nd quarter. On Friday, US household expenditures and income data as well as consumer price index will be released.
The World Investment Report showed that international funds invested a record $900 billion in the United States in the first half of 2021. This is a record increase in investment since 1992. The inflow of investments helped the US stock market develop a strong rally for six months. On Monday morning, the S&P500 index has grown by +17% since the beginning of the year while the DAX Index has added only 14%. Asian stock indices have lagged behind. China's stock indices rosy by +2% since the beginning of the year. Japan's stock indices are also approximately at the levels of the beginning of the year.
The US dollar index is currently trading at 92.80. It is likely to stay in the range of 92.50 - 93.10. The US dollar index gets stuck in in a narrow range before the Fed's meeting. Judging by the technical analysis, the US dollar is likely to break out of consolidation and resume the upward movement.
USD/CAD is trading at 1.2590. It is likely to stay in the range of 1.2460-1.2700. The US dollar weakened significantly against the Canadian dollar in comparison with other currencies. Probably, the loonie rose amid a decrease in oil prices.
The prospects of the US stock market and the greenback will depend on the results of the Fed's meeting scheduled for Wednesday. Stay up to date and monitor investors' reaction to this event.
