The US30 has charted another lower peak (LP) in its downtrend. The index trend shows a series of lower peaks followed by lower troughs, and this week's LP potentially sets up for the next lower trough. Moreover, the RSI, which indicates when a market is in excess, is not oversold, implying that the current impulse down still has room to move.
Today's data has had a severe impact on market confidence. Inflation came in above forecast, with annualised headline CPI at 8.6% (vs 8.3% expected), a 40-year high. The core number printed at 6% against an expectation of 5.9%. Moreover, the US consumer is feeling the pressure with the Unversity of Michigan consumer index collapsing to 50.2 (vs 58.1 expected).
Notably, Fed funds futures are now pricing, with a current probability of 62%, a 50 bps hike for September. The increase will impact the market rate of returns, which will continue to affect present values for as long as they adjust upwards.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.