The British pound is in negative territory today, after a contraction in UK GDP. In the European session, GBP/USD is trading at 1.2126, down 0.61% on the day. British economy declines in Q2 The British pound posted dazzling gains on Wednesday, surging 1.19%. The impressive climb was, however, a case of US dollar weakness, rather than any newfound strength in the pound. Inflation in the US was unexpectedly weaker than forecast, which raised market hopes that the Fed will ease policy. This led to the US dollar being less attractive and the currency took a nasty spill against all the majors. Sterling hasn’t fared as well after the UK posted the second-quarter GDP report. The economy fell in July by -0.1% QoQ, following a 0.8% gain in June (-0.2% exp). On an annualized basis, GDP growth slowed to 2.9%, within expectations but sharply down from 8.7% in Q1. The outlook does not look good as we head towards winter, with UK households about to be hit with sharp increases in energy prices. Consumers are already struggling with a nasty cost of living crisis, and as they tighten the purse strings, the spectre of a recession will become that much more likely. Another key indicator, Manufacturing Production, came in at -1.6% MoM, down from a 1.7% gain in May (-1.8% exp). This was the fourth decline in five months, pointing to a worrying downtrend in manufacturing. The week wraps up with UoM Consumer Sentiment, a key confidence indicator. With the cost of living crisis in the US, it’s no surprise that the index has tumbled – falling from 65.7 in March to just 51.5 in June. This points to weak expansion, just above the neutral 50.0 line. The July forecast calls for a slight improvement to 52.5 points. GBP/USD technical GBP/USD continues to test resistance at 1.2241. Next, there is resistance at 1.2361.  There is support at 1.2123 and 1.2061.

The most highly antipated economic reports of this month, if not this quarter was released on Wednesday and showed U.S inflation steadied for the first time since May 2020. In the middle of a growingly-uncertain economic environment, there was one piece of semi-good news this week with the closely watched U.S inflation report showing consumer prices didn't rise at all in July compared with June. That’s largely thanks to a significant drop in gasoline prices, which are finally approaching $4 a gallon on average after rising above $5 in June. While many economists and policymakers have held back from jumping to any big conclusions from this month's data, President Joe Biden definitely wasn't one of them. “While the price of some things went up, the price of other things went down by the same amount. The result: zero inflation last month,” Biden victoriously declared following the data release on Wednesday. As traders very well know – one month's data does not make a trend. And it certainly doesn't mean an era of rapidly surging prices – or Fed rate hikes – is over. In response, several key Fed officials left no doubt they will continue to tighten monetary policy until price pressures are fully broken. The Fed is "far, far away from declaring victory" on inflation, said Minneapolis Federal Reserve Bank President Neel Kashkari. His views were echoed by San Francisco Fed President Mary Daly, who also warned it is far too early for the U.S central bank to "declare victory" in its fight against inflation. Calling inflation "unacceptably" high, Chicago Fed President Charles Evans said he believes the Fed will likely need to lift interest rates to 4% by year-end and to 4.4% by the end of 2023 – in line with what Fed Chairman Jerome Powell signalled after the Fed's latest meeting. Elsewhere, former Treasury secretary Larry Summers said “there’s positive news here, but not of a kind that should fundamentally alter anyone’s view” – warning that inflation could prove sticky and that it may take a recession to bring it down dramatically. If history has taught us anything, then the one thing that we do know for certain is both scenarios, whether that’s persistent Inflation or a Recession, ultimately present an extremely lucrative backdrop for commodity prices. Right now, this is a traders' market packed with endless opportunities to capitalize on the short-term macro-driven volatility – And that's the most profitable strategy right now! Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

Outlook: It will be nice to see import prices down, but trade has a lesser effect on the dollar with every passing year. What will get attention is the University of Michigan consumer sentiment index, expected to rise to 52.5 in Aug from 51.5 in July (and 50 in May). Ho hum. The data gets far more attention than it deserves because the survey covers only about 500 people and regular people don’t know much, anyway. That applies to the one-year inflation expectations, too, forecast down to 5.1% from 5.2%, barely enough to mention. The 5-10-year survey forecast is seen slipping to 2.8% from 2.9%. This would put in back to April 2021, according to Bloomberg., Big deal. Bloomberg also notes “The two-year breakeven (difference between the conventional yield and the inflation-protected security) peaked in March near 5% and this week reached 2.70%, its lowest since last October. It is near 2.80% now.” Again, this is more wishful thinking than based upon any professional economics modelling or even common sense, especially now that we have several outpfits, including various regional Feds, delivering “sticky” inflation estimates. That means the drop in the probability of the 75% Sept rate hike from 75% at the start of the week to 47% now is an idea built on sand. The same thing applies to the year-end rate expectation down to 3.52% from 3.56%. Rapid see-sawing in inflation expectations and the resulting effect on yields is a snare and a delusion. No one knows better than the Fed that one or two data points suggesting the peak has passed cannot be trusted. The Fed simply must stick to its plan, if it can becalled that, to hike three more times this year and hang on to those hikes well into Q1 2023. It’s possible, just, that a glimmer of acknowledgment of that idea is behind the slight improvement in the dollar. For that purpose, it’s the 2-year that needs watching. See the Market Watch chart. It’s not much, but the drop in yield followed by a rise in yields one day later implies great uncertainty. Chandler notes “The two-year note yield fell almost 25 bp in the last two weeks of July and jumped 34 bp last week. It is virtually flat this week around 3.22%.” In a nutshell, some of the hopeful are staging a fistfight with some of the reality-checkers. The spillover to FX is occurring mainly in the dollar/yen, chiefly because we have an anchor there–the fixed BoJ curve-control policy. As for what’s happening elsewhere, the retreat in the big gainers, especially currencies like the AUD, is scary. We could be looking at a dying flash in the pan. We expect a retreat after a big move, but we need it to end and PDQ if the new trendlette is going to thrive. So far we have about a 25% retracement of the big move on Wednesday. Today may not tell us whether it ends or persists because it’s a Friday in the bowels of summer. We are at risk of the dollar recovering more than “normal.” Don’t laugh, but this is where old-fashioned support and resistance lines can come in handy, especially if they coincide with indicators like the B band. This is an excerpt from “The Rockefeller Morning Briefing,” which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading. Rockefeller produces other reports (in spot and futures) for trading purposes. To get a two-week trial of the full reports plus traders advice for only $3.95. Click here!

S&P 500 did another daily reversal, but the bears haven‘t yet won. The risk-on in stocks hasn‘t been broken as value demonstrates, but bonds are getting the macro picture right, as they often do – the Fed is to remain hawkish as Daly reaffirmed, which would help keep real assets in check while that lasts. Precious metals proved their sensitivity to sharp increases in yields – this recognition of the tightening reality played out on the long end of the curve, not affecting the continued rate raising expectations for Sep FOMC really (regardless of the inconsistent market interpretations of both CPI and PPI). S&P 500 and Nasdaq outlook Even if S&P 500 pushes higher today on better-than-expected consumer sentiment data (relief at the pump), the bears are likely to break below the 4,212 support next week (if not later today already). Credit markets HYG is likely to retrace a part of yesterday‘s reversal – a proper reversal as the volume confirms while quality debt instruments would play a lesser role in moving stocks today. Clearly, bonds aren‘t bullish here, and the deterioration is to continue over the weeks ahead. Bitcoin and Ethereum Similarly in cryptos, no game-changer happened, and the rally is looking tired.

Europe It’s been another positive week for markets in Europe with the DAX briefly rising to a two-month high before slipping back. Despite the slow drip feed of negative headlines of rising gas prices, and the supply chain challenges thrown up by the heatwave in Europe there’s been little appetite to drive stocks lower. The news that the Rhine River had fallen to a critical 40cm depth level which would require it be closed to freight barely registered a response. This is probably because smaller barges can still operate at a lower minimum depth level of 30cm. The resilience of US markets may be helping here as receding inflation is tempering expectations that the Federal Reserve will be as aggressive as originally supposed when it comes to raising rates. The FTSE100 also hit a two month high earlier this week as it also closes higher for the fourth week in succession.   Having seen positive numbers from Entain yesterday, Paddy Power owner Flutter Entertainment has posted a similarly positive update, putting a bow on a week of strong gains. Group revenues in H1 increased by 11% to £3.39bn, although losses came in at £112m, up from an £86m loss a year ago, though this was mainly down to various acquisition related costs. Customer numbers increased over the period by 14% to 8.7m average monthly players, with the US business driving the main gains with a 49% increase in monthly players. The prospect for growth in the US appears to be outweighing concerns over the potential for weakness in its UK and European business. Revenues in the US rose by 50% to just over £1bn. On the outlook for H2, the company said that so far there has been no discernible slowdown of a consumer slowdown, and that full year EBITDA is expected to come in line with expectations. Over the past few days, we’ve seen big falls in the share price of GSK as well as Haleon after GSK was named in a lawsuit, along with Sanofi, over the use of Zantac, a drug that was withdrawn from use in 2019, over concerns it caused cancer. These two have been the worst performers this week on the FTSE100 despite today’s modest rebounds. Zantac was a drug that was used in treating gastric distress, like heartburn or indigestion. Haleon appears to be being targeted, perhaps unfairly due to having only been recently spun out from GSK. The falls in the share price have today prompted a statement from GSK, where they state that the US FDA and the EMA in Europe concluded there is no evidence of a link with cancer. The statement went on to say that GSK have informed Haleon of notice about potential claims under indemnification provisions of the spin-off, while going on to say that it is not possible to quantify what any potential liability might be.   Insurers have also had a positive week on the back of this week's H1 updates from Aviva, Admiral Group, and Legal & General.   US US markets have opened higher taking their cues from a positive session in Europe, and a sharp fall in import and export prices in July, underlying that inflation pressures in the US are continuing to ease. The latest University of Michigan inflation survey was a bit of a mixed bag, with confidence improving in August, while 1 year inflation expectations declined to 5%, however 5–10-year expectations edged higher to 3%, from 2.9%. Electric car maker Rivian’s latest Q2 update proved to be less than impressive, although there were signs of progress. Having built 2,553 vehicles and delivered 1,227 of them in Q1 the company said it expected to produce 4,000 in Q2. The company managed to achieve that, with 4,401 produced with the company delivering 4,467 of them. Rivian said it remained optimistic of delivering on its 25k target for the whole year, despite the challenges facing production and sourcing raw materials. Forward sales also came in ahead of expectations, at $364m, however the company said production costs were rising, which meant that Q2 losses were higher than expected at $1.71bn. Full year losses are now expected to rise to $5.4bn, and while it still has plenty of cash, the rise in costs is likely to be a problem unless they look at raising prices.   FX The US dollar has seen a bit of a rebound today at the end of what has been a negative week for the greenback. Declining inflation expectations and weaker than expected inflation, has seen markets reduce the prospects of a more aggressive Federal Reserve when it comes to raising rates. This week’s inflation numbers have shifted the dial on a 75bps rate hike in September, to a less aggressive posture of 50bps. Rather surprisingly, the main beneficiary...

EUR/USD topside yesterday was set against targets at 1.0256 and 1.0259. Both extraordinary moves for the day and both targets achieved for big profits yet EUR/USD breaks vital 1.0285 and trades another 82 pips to 1.0367. Note the location of 1.0285 as dead center of the hourly candle. The break of 1.0285 then placed EUR/USD from 1.0285 to 1.0350. What allowed EUR/USD to travel higher was the ECB at 10:00 then EUR/USD was good until 1.0304. The BOE at 11 am stopped EUR/USD to begin the long slide lower to 1.0320. The Fed at 12:30 then settled EUR/USD at 1.0296 from 1.0367 highs or71 pips. EUR/USD yesterday traded for the day overall 167 pips and about 67 more than normal. On the surface appears as just another EUR/USD trade day but 1.0285 set EUR/USD off 82 of the 167 pips or 1/2 of its total 167 pip range. The 2 most vital points to traded markets are overall ranges and range points such as 1.0285. How much was 1.0285 respected was seen in the weekly trade target at 1.0283. Friends and subscribers profits were 130 ish pips but the pips were easy and guaranteed. And the trade duration was 4 days. Range Vs Price shares the most unique relationships and most vital to understand market trading. What were the trade options. Not only was EUR/USD overbought at 1.0285 for the day but 1.0285 location was dangerous. The only option was short and short anywhere. EUR/USD moves yesterday were unusual, extraordinary and in mathematical weirdo ville. Correct was EUR/USD to reverse at 1.0250's. Who or possibly which central bank took EUR/USD higher from 1.0285 is unknown. We're not privy to such information anymore as was the norm in the old days from the top 4 banks. Previously, the top 4 banks release Flow Reports to determine who to major banks and central banks were big buyers and sellers. EUR/USD Big break for higher is now 1.0420 and the range becomes 1.0357 to 1.0294. Below 1.0294 targets 1.0231 easily. EUR/USD Friday should close in the vicinity of 1.0168. The lower for EUR/USD is the better for the long trade next week. GBP/JPY shorts yesterday at 163.82 traded to 163.64 then began the long drop to 161.00's. GBP/JPY vital at 162.01 allowed GBP/JPY to trade to 161.00's. Big break for higher is now 162.05. EUR/JPY is on the verge to trade lower at 136.95. EUR/JPY is a horrible currency at the moment heading into week 3. EUR/JPY trades neutral to neutral without significant progress. EUR/JPY is more suited as a day trade. EUR/JPY broke vital 136.93 and traded 30 pips lower to 136.60. This should serve as a warning to EUR/JPY. DXY achieved 106.45 and USD/CAD 1.2990's. As written yesterday, USD/CAD 1.2958 Vs DXY 106.45. The DXY V USD/CAD differential spread from 20 ish pips to 40's. Higher for USD/CAD must break 1.2835. DXY now enters its next range from 103.00's to 105.00's. Vital above is located at 105.54, 105.76 and 105.80 Vs 104.30 below. The breaks below for DXY was significant as much as 1.0285 was for EUR/USD. AUD/USD broke above 0.7001 and lower for AUD/USD must crack 0.7013. Current range 0.7055 to 0.7096 then begins overbought and shorts. Most important to overall currency markets is NZD/USD break above 0.6362 and today 0.6368. NZD/USD at 0.6417 is fairly neutral which means NZD has every ability to travel to 0.6500's or break below 0.6368. We're short next week in the vicinity of 0.6490's or long upon a break of 0.6368. GBP/AUD yesterday was written longs at 1.7395. Correct was short at 1.7395. Deeply oversold GBP/AUD should be a big winner for longs next week. Same story for EUR/AUD. USD/JPY for next week 131.61. GBP/USD. Looking for a close around 1.2104 for longs next week. A close much higher then GBP/USD is on the last place of the trade rank list. EUR/NZD as written yesterday long for a quick 50 pips at 1.6178. EUR/NZD traded 1.6150 to 1.6274. EUR/NZD current trades deeply oversold and informs NZD/USD could easily break 0.6368. Gold traded 20 points yesterday and expected to trade 10 points today. SPX traded 31 points yesterday and within the 25 point framework. Max today is right at 47 pips.