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S&P Near Highs
US stock market prices are surging higher this week as anticipation grows ahead of a keenly awaited speech by Fed chairman Powell at the top of the week. With inflation having fallen again last month traders are widely expecting a dovish confirmation from Powell this week. This expectation is reflected in the current USD weakness we are seeing, helping drive capital back into stocks and other risk assets. Traders have now seemingly moved beyond the recessionary fears which saw stock prices plunge lower at the start of the month. Buoyant July retail sales last week fuelled a shift in sentiment with traders now purely focused on Fed easing expectations and recessionary fears put aside for now.
FOMC Minutes & US Data on Watch
Ahead of Powell’s comments at the Jackson Hole Symposium later this week we have plenty of important data. Tomorrow, the July FOMC minutes are due, which should give USD bears an initial boost. The minutes are likely to show support for easing if inflation continues to fall. Given the latest inflationary dip last week, any comments along these lines should prove bullish for stocks, sending USD lower. On Thursday, we then have the latest set of US PMIs. Any further weakness should simply add into bearish USD sentiment though any heavy downside surprise could see recessionary fears emerging again. However, with Powell at the top of the week, the main volatility is likely to be seen then.
Technical Views
S&P 500
The rally in the S&P has seen the market breaking back above the 5,502.19 level and back inside the bull channel. With momentum studies bullish, focus is now on a fresh test of the 5,677.97 level and an eventual break higher.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.