Russell Shor

Oil has benefited from the recent dollar decline, with both UKOil (Brent) and USOil (WTI) CFDs moving into the neutral areas between their blue bands (green rectangles).

Inflation is still in focus as the US printed at 9.1% - the fastest pace since 1981. Bank of Canada surprises with 100bps to front load hikes due to inflationary concerns. Waller and Bullard talk down hike expectation to 75bps from 100bps. Fed funds rate has 75bps at 70% for 27 July hike. Bank earnings disappoint; this week, NFLX and Tesla kick off the tech side. Housing data is in…

Considering the weekly timeframe, FXCM's Nasdaq CFD, NAS100, shows a decline (top chart) as the real interest rate appreciates (middle chart). As risk increases, capital will rotate out of the risk asset into a safer income-yielding investment. Moreover, the NAS100's required rate of return has increased, and its present value has adjusted downwards.

Retail sales increase on a nominal basis but slow on a real basis.

As Q2 earnings season officially starts, we consider two SPX500 daily charts.

The weekly gold charted a series of lower peaks (LP) followed by lower troughs (LT). Thus, XAUUSD is trending down on a primary basis. Therefore, in our view, the week of Monday, 18 April (black dashed vertical) was a critical period (T1) for the precious metal, marking its first LP.

The BoC surprised with a 100bps hike. The market was expecting 75bps, which was already a pivot from an earlier expectation of 50bps.

A policy cannot deal with the supply shocks impacting the economy. Market participants are aware of this and will continue looking for a return commensurate with the heightened risk. In this environment of uncertainty, the price is still adjusting. Thus it seems, for the time being, they may have settled on "cash is king."

EURUSD hit parity earlier in the day. However, the underlying fundamentals may drive it even lower.

Banks look to borrow nearer the short-end of the curve and want to make their loans at higher rates. Given that the spread is narrowing, their profit incentive is declining, which implies stricter conditions for loans and headwinds to margins.

Q2 earnings kick off this week. This season will make PE analysis very interesting, given its decline towards its historical mean.