New All-Time High For S&P 500, UK, EU and CAN CPIs, FOMC Meeting Minutes

S&P 500 Hit A New All-Time High, But Closed Below The Previous One

Yesterday, the US equity market showed a good run to the upside, as big tech stocks, such as Amazon.com Inc (NASDAQ: AMZN), which gave a boost to Nasdaq 100 and the S&P 500. Both of those indices managed to hit new all-time highs, however, the later one failed to close above the previous all-time high, at 3393.5, reached in February this year. Once again, the Dow Jones Industrial Average index ended its trading session slightly in the red. The July US housing starts and building permits released yesterday, also contributed to S&P’s and Nasdaq’s good run to the upside, as both numbers came out on a much higher side of what was initially expected. Housing starts showed up at 1496m against the 1240m expectation and the building permits came out at 1495m versus 1320 initially forecasted.

DAX — Technical Outlook

Yesterday, the German DAX tried to make its way higher, but got halted near its short-term tentative downside resistance line taken from the high of July 21 st. The index then reversed sharply lower and came closer to its key support area between the 12792 and 12805 levels. For now, we will take a neutral stance and wait for a violation of one of our levels, before examining the next short-term directional move.

UK, EU and CAN Inflation Numbers

In terms economic data today, it will be an inflation report day, where several nations will deliver their CPI figures for the month of July. UK had already kicked off the day with those data sets, which came out better than expected. Both MoM and YoY core readings, which exclude food and energy, came out at +0.4% and +1.8% respectively, whereas the initial expectations were for a -0.1% and +1.3%. The headline numbers were slightly on a more modest side. The MoM July reading showed up at +0.4%, same as core, but the YoY figure was only at +1.0%. Still, that is better than the initial forecast of +0.6%, but if compare to the core, it is way too far. The Bank of England inflation target sits at 2%. Although today’s core YoY figure showed up closer to the target, the headline number is still lagging. The British pound barely moved after the news release. Most likely, investors are worried more about the overall state of the UK’s economy, which is suffering from the effects of the pandemic.

GBP/CAD — Technical Outlook

GBP/CAD had a good run to the upside yesterday, breaking above its short-term tentative downside resistance line drawn from the high of July 31 st. The pair pushed higher, but found strong resistance near the 1.7455 barrier. There is a possibility to see a small correction lower, however if the rate continues to balance above all of its EMAs, the bulls may take charge again, hence why we will stay somewhat positive, for now.

FOMC Meeting Minutes

Another important piece of information on Wednesday will be from the FOMC’s, which will release its Meeting Minutes. In the end of July, the FOMC kept their interest the range of 0% and +0.25%. According to the CME’s FedWatch Tool, there currently no expectations for the target range to change all the way till March 2021. The FOMC had noted in their last statement, quote: “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” The main concern for the FOMC right now is the coronavirus and its effects on the US and global economies. Also, tensions with China are also monitored, as that may force the Fed to adjust their policy accordingly, if there won’t be any progress in the US-China talks.

As For The Rest Of Today’s Events

We will get the US weekly crude oil inventories, which are expected to have increased slightly. If the actual reading comes out as expected, this may prove to be negative for the price of oil. However, let’s not forget that last week, the initial forecast was also on the lower end, comparing to the previous reading, but the actual figure showed a -4512m barrels. That said, the data did not have a significant effect on the price of oil, as it continues to move sideways.

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