Source: PaxForex Premium Analytics Portal, Fundamental Insight
US Personal Income for July is predicted to increase 0.6% monthly, and Personal Spending by 0.4% monthly. Forex traders can compare this to Personal Income for June, which rose 0.4% monthly, and to Personal Spending, which expanded 1.1% monthly. The PCE Core Deflator for July is predicted to increase 0.3% monthly and 4.7% annualized. Forex traders can compare this to the PCE Core Deflator for June, which rose 0.6% monthly and 4.8% annualized.
US Preliminary Wholesale Inventories for July are predicted to increase 1.4% monthly. Forex traders can compare this to US Wholesale Inventories for June, which rose 1.8% monthly. The US Trade Balance for July is predicted at -$98.50B. Forex traders can compare this to the US Trade Balance for June, reported at -$98.59B. The final US Michigan Consumer Confidence for August is predicted at 55.2. Forex traders can compare this to US Michigan Consumer Confidence for July, reported at 51.5.
Traders will await comments by US Fed Chief Powell from the Jackson Hole Symposium but are unlikely to receive the news they expect. The US central bank, confirmed by a host of Fed speakers, established it would raise interest rates until inflation can maintain a level near its inflation target of 2.0%.o Economic indicators paint a mixed economic picture, with many companies dependent on consumer spending issuing profit warnings. Supply chain disruptions remain, and with fall and winter arriving, renewed Covid-19 restrictions in core exporting hubs are likely to keep upside pressure on inflation.
Companies continue to increase wages, adding wage-based inflation to the mix, fueling a downward spiral. Financial markets completed a textbook bear market rally, and all signs suggest a renewed sell-off, expected to last through September and possibly beyond, which can challenge the June lows. The host of profit warnings, ongoing inflationary pressures, and central banks playing catchup to years of policy mistakes favor more downside across financial markets.
The forecast for the SP500 turned bearish after price action recorded a lower high before retreating. It is now stuck between its flat Kijun-sen and Tenkan-sen, suggesting the absence of short-term bullishness. Price action could remain choppy until its ascending Ichimoku Kinko Hyo Cloud catches up, from where the next bearish move could unfold. Traders should monitor the CCI, which may temporarily peak above zero before retreating towards a fresh low in extreme oversold territory. This index has plenty of downside potential. Can bears regain control over the SP500 and pressure this index into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the SP500 Index remain inside the or breakdown below the 4,115 to 4,215 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 4.195
- Take Profit Zone: 3.630 – 3.720
- Stop Loss Level: 4.325
Should price action for the SP500 Index breakout above 4,215, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 4.325
- Take Profit Zone: 4.520 – 4.635
- Stop Loss Level: 4.215
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