On Wednesday, the Dow Jones grew by 0.6%, while the NASDAQ Composite dropped 0.2%. The S&P 500 index added 0.25%.
Yeterday, the most anticipating report of the week was released – the CPI index for July. Inflation in July decreased significantly compared to June. The reading declined by 0.5% versus 0.9%. The core inflation (without fuel and food) fell even more by 0.3% versus 0.9% in June. Non-adjusted inflation dropped in July by 3% from more than 5% in May and June.
The data seems to confirm the Fed's position that high inflation is temporary. It is likely to decrease in the future to the target level of 2.5% per annum. The US dollar declined after the release of inflation data. The major US indices reached new highs of the year. Yet, their growth was quite modest.
At the same time, China's stock market shed 0.7% and Japan's stock market was down by 0.1%.
As for the commodity market, oil prices are growing gradually. Brent crude is consolidating above $71- 71.50.
The US authorities have confirmed that they are negotiating with OPEC to increase oil supplies in order to stabilize oil prices. Oil crude stockpiles in the United States declined by 0.5 million barrels; gasoline by 1.4 million barrels, remained almost unchanged. The season for auto sales in the United States will end in September.
The coronavirus is still in the limelight. A new high in the current third wave was recorded yesterday - 705,000 in the world. The US also reported the highest growth of 144,00 cases yesterday. The death toll in the US totaled 600 compared with 799 deaths in Russia. In the UK and France, there were 30 new cases with the death toll amounting to 50 - 100. Even the mass vaccination did not stop the spread of the virus but reduced the percentage of deaths by 5-10 times. Currently, almost all severe coronavirus cases are among the unvaccinated.
The S&P 500 index is trading at 4.447. It is likely to stay in the range of 4.400-4.470. Yesterday, the US indices hit new highs of the year and all-time closing highs. However, their growth may be limited in the future as investors are unwilling to buy shares for a long time at such high prices. Even with the expectation of continued growth, a rollback of at least 5% will be favorable as investors are likely to buy more shares.
The US dollar index is trading at 92.80. It is likely to stay in the range of 92.50–93.10. The US dollar index retreated from the highs of the year following data on a noticeable decrease in inflation. The US dollar may sharply decline until new comments about the possible tapering of the bond-buying program appear. Richmond Federal Reserve Bank President Thomas Barkin said that the country was making progress toward the level of the labor market the Fed has said it wants before scaling back the monthly purchases and eventually ending the program. "We are closing in ... I don't know exactly when that will be. When we do close in on it I am very supportive of tapering and moving back toward a normal environment as quickly as the economy allows us," Barkin said.
The USD/CAD pair is trading at 1.2506. it is likely to stay in the range of 1.2400-1.2600. The pair is likely to consolidate in this range as there are no fundamental factors for the ruse in the US dollar or oil.
Currently, the US equity market is booming yet for how long, it remains to be seen.
