#SP500:
Companies reporting earnings in coming weeks are likely to mention one common factor gouging their results: the strong dollar. The U.S. currency stands near a 20-year high against a basket of its peers and is up 15.1% in the past year, lifted by a hawkish Federal Reserve and investors seeking shelter from turbulent markets. A strong dollar can be a headwind for U.S. companies as it makes exporters’ products less competitive abroad and hurts multinationals that need to convert their foreign profits back into the U.S. currency. Investors are also awaiting what the Fed will have to say on those topics at its monetary policy meeting next week, at which it is widely expected to deliver another jumbo-sized 75 basis-point rate increase. The dollar’s strength threatens to combine with high inflation, supply chain issues and other factors to weigh on earnings.
Trading recommendation: sell 4000 and take profit 3810.
XAUUSD:
Gold steadied after posting its biggest gain in more than a month as investors weighed renewed concerns over economic growth amid tightening monetary policy. Bullion is heading for its first weekly advance in six weeks as the US dollar retreats from a record hit on July 14 and as Treasuries surged Thursday, pushing the 10-year yield below 3%. Fears of a recession are mounting as data Thursday showed jobless claims at an eight-month high and a slump in one regional factory outlook. One index of leading economic indicators is pointing to a contraction. Investors will closely watch the Federal Reserve’s meeting on July 26-27 for clues on its monetary policy path. On Thursday, the European Central Bank raised its key interest rate by 50 basis points, the first increase in 11 years, as it confronts surging inflation.
Trading recommendation: range 1700 -1750.
#WTI:
Saudi Arabia and Iraq are diverting more and more of their crude oil toward Europe, helping the continent’s oil refineries to overcome a pivot away from Russia. The piped flows are dominated by shipments from Saudi Arabia but Iraq is also ramping up deliveries too. Companies can either deliver into a pipeline called the SuMed that crosses Egypt or, if their ships are small enough, go straight through the Suez Canal into the Red Sea. Piped volumes have increased from about 800,000 barrels a day a month earlier to the highest since a brief surge during a production free-for-all in April 2020. In addition to those flows, about 1.2 million barrels a day have been shipped toward the canal from the Persian Gulf in the first three weeks of July, mostly from Iraq. That could take total flows from the Middle East to Europe to 2.2 million barrels a day, up by nearly 90% since January. This is a negative signal for oil prices.
Trading recommendation: sell 96.50 and take profit 93.30.
