US stocks soared to record highs after data showed that inflation was cooling down. The Dow Jones rose by more than 200 points while the S&P 500 index rose by more than 10 points. The Nasdaq 100 index, which tracks big tech companies, declined by 20 points. In a report, the Labor Department said that headline inflation remained unchanged at 5.4% while core inflation eased from 4.5% to 4.3%. At the same time, Southwest warned that the number of flight cancellation trends was rising as the Delta variant spread. Therefore, these new developments mean that the Federal Reserve will maintain its easy-money policies for longer.
The price of crude oil continued its recovery path even after the White House urged OPEC to boost production. In a statement, Jake Sullivan, the White House economic advisor, said that the recent supply increases were insufficient to deal with the overall higher prices. In July, OPEC+ members agreed to a gradual phase of oil supply increases as they moved towards the pre-pandemic levels. The price also reacted to the latest EIA inventories numbers. According to the EIA, the number of oil inventories declined by 447k barrels last week after rising by more than 3.66 million in the previous week. Analysts were expecting a drawdown of more than 1.27 million barrels.
The Japanese yen rose slightly after relatively strong producer price index (PPI) data. According to the country’s statistics agency, the headline inflation rose from 5.0% in June to 5.6% in July. This increase was better than the median estimate of 5.0%. On a MoM basis, the PPI rose from 0.6% to 1.1%. These numbers show that the gap between the PPI and CPI is widening. Elsewhere, the Office of National Statistics will publish the latest UK GDP data while the Turkish Central Bank will deliver its interest rate decision. In the US, the statistics agency will release the latest PPI and initial jobless claims numbers.
XBRUSD
The price of Brent crude rose to 71.98, which was substantially higher than this week’s low of 68.15. The price is still substantially lower than the year-to-date high of more than 76. It has moved above the 25-day and 50-day moving averages while the MACD and the Commodity Channel Index (CCI) have been on an upward trend. It has also formed a double-bottom pattern, meaning that the price will likely keep rising as bulls target the key resistance at 73.50.
EURUSD
The EURUSD pair rose slightly after the latest US inflation data. The pair rose to a high of 1.1740, which was slightly above this week’s high of 1.1700. On the four-hour chart, the pair is below the important resistance at 1.1750. A closer look shows that it has formed an inverted cup and shoulders pattern. Therefore, the pair will likely resume the downward trend in the next few days.
GBPUSD
The GBPUSD bounced back after US inflation data and ahead of the latest UK GDP data. On the 4 hour chart, the pair has formed a bullish flag pattern. It has also moved above the 25-day moving average and between the 50% and 38.2% Fibonacci retracement level. The RSI has also risen to a high of 51.50. The pair will likely bounce higher as bulls target the key resistance at 1.3980.
