Stocks rise as Powell signals a rate cut

Powell’s testimony to Congress had a dovish bias, suggesting a rate cut is coming, possibly as early as this month. The SPX500 index hit a record high, briefly touching above 3,000. Bank of Canada kept rates unchanged while oil reached a three-week high.

US30USD Daily Chart

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The US30 index snapped a three-day losing streak yesterday after Powell said trade war and global growth uncertainties outweighed the strong labour market, signaling a rate cut is on the way

The 100-day moving average at 26,067 is edging closer to the 55-day average at 26,117

FOMC minutes of the last meeting showed most members considered a rate cut warranted in the near term if recent global trade issues continue to weigh on the outlook. US CPI data for June are due today and seen rising 0.2% m/m, up from +0.1% in May. A lower-than-expected number would almost cement a rate cut later this month.

DE30EUR Daily Chart

The Germany30 index fell for a fifth day yesterday, ignoring the euphoria on Wall Street. The index appears to be bringing that losing streak to a halt today

The index slid to a near-two week low yesterday, posting the biggest daily loss since June 21. The 55-day moving average is at 12,202

German consumer prices are expected to rise 0.3% m/m and 1.6% y/y in June, the latest survey of economists shows. ECB’s Coeure is scheduled to speak.

WTICOUSD Daily Chart

Crude oil prices jumped the most in three weeks yesterday, with WTI touching the highest since May 23 this morning

WTI is testing the 61.8% Fibonacci retracement of the April-June decline at $60.38

Weekly stockpiles data to July 5 from EIA confirmed a pickup in demand with a drawdown of 9.5 million barrels, the second-largest reduction since March. Oil supply could be affected by a potential hurricane building in the Gulf of Mexico.

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