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US stock market closes higher, Dow Jones gains 1.37%



At the close of the New York Stock Exchange, the Dow Jones rose 1.37% to hit a monthly high, the S&P 500 rose 2.62% and the NASDAQ Composite rose 4.06%.

Shares of Microsoft Corporation led the way among the components of the Dow Jones index in today's trading, which gained 16.84 points (6.69%) to close at 268.74. Salesforce.com Inc rose 9.84 points or 5.77% to close at 180.30. Walmart Inc rose 4.61 points or 3.78% to close at 126.59.

The biggest losers were 3M Company, which shed 1.89 points or 1.34% to end the session at 138.86. The Travelers Companies Inc was up 1.90 points or 1.18% to close at 158.96, while Visa Inc Class A was down 2.02 points or 0.95% to close at mark 210.47.

Leading gainers among the components of the S&P 500 in today's trading were Enphase Energy Inc, which rose 17.89% to hit 254.77, Chipotle Mexican Grill Inc, which gained 14.70% to close at 1.00. as well as PayPal Holdings Inc, which rose 12.18% to end the session at 86.42.

The biggest losers were Sherwin-Williams Co, which shed 8.78% to close at 231.97. Shares of Garmin Ltd lost 8.72% to end the session at 93.56. Quotes of Teledyne Technologies Incorporated decreased in price by 7.01% to 372.01.

Leading gainers among the components of the NASDAQ Composite in today's trading were Blue Water Vaccines Inc, which rose 53.17% to 3.14, Cryptyde Inc, which gained 43.70% to close at 1.27, and also shares of QualTek Services Inc, which rose 37.78% to end the session at 1.35.

The biggest losers were ObsEva SA, which shed 75.40% to close at 0.40. Kalera PLC lost 20.77% to end the session at 2.48. Quotes Burcon NutraScience Corp fell in price by 18.06% to 0.59.

On the New York Stock Exchange, the number of securities that rose in price (2573) exceeded the number of those that closed in the red (519), while quotations of 108 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,854 companies rose in price, 916 fell, and 174 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 5.87% to 23.24.

Gold futures for August delivery added 0.86%, or 14.70, to $1.00 a troy ounce. In other commodities, WTI crude for September delivery rose 3.35%, or 3.18, to $98.16 a barrel. Brent oil futures for October delivery rose 3.00%, or 2.98, to $102.44 a barrel.

Meanwhile, in the Forex market, EUR/USD rose 0.84% to hit 1.02, while USD/JPY shed 0.30% to hit 136.51.

Futures on the USD index fell 0.68% to 106.31.

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USD tactics and strategy: we need to retreat in order to put the euro's vigilance to sleep



At the end of this week, the US currency partially lost its position, giving way to the European one. However, some analysts believe that this is a clever tactical move on the dollar's part. The latter has to use a withdrawal strategy to distract the attention of the euro and give it a false sense of superiority.

According to experts, the greenback can afford to retreat, since its position in the global financial arena is quite strong. A short-term redistribution of forces in favor of the euro will not prevent the USD from reaching new heights. Currently, the greenback has sunk a bit, but soon financial fortune will smile on it, experts believe.

A short-term pullback of the US currency occurred after the Federal Reserve meeting, following which the central bank increased the interest rate by 75 bps, to 2.25-2.50% per annum. This decision coincided with market expectations, although some feared aggressive steps on the part of the Fed, namely raising the rate by 100 bps. However, the central bank prefers to move gradually, believing that in this way it will be able to control inflation.

At a press conference that took place after the central bank meeting, Fed Chairman Jerome Powell expressed readiness to further raise the rate if circumstances require it. According to Powell, the scale of the next hikes may be reduced in the event of a slowdown in inflation. According to Powell, as the monetary policy is further tightened and inflation is curbed, it is advisable to slow down the pace of the rate hike.

Market participants reacted positively to this information, considering that the central bank will limit itself to raising the rate by 50 bps at the September meeting. Note that the Fed currently adheres to the toughest strategy of raising rates over the past 40 years. Earlier, after the global financial crisis of 2008, the American economy was much harder to bear even a slight increase in rates. Now the situation has improved, despite its decline by 0.9% year-on-year and the decline in US GDP.

Against this background, the EUR/USD pair remained stable and was trading near 1.0220 on Thursday, July 28. The pair managed to maintain an upward momentum for a long time, which was occasionally interrupted. The EUR/USD pair was trading at 1.0242 on Friday morning, July 29, significantly strengthening its positions. According to analysts, the pair is currently in a consolidation phase, and in the next few weeks it will remain in a wide range of 1.0100-1.0285.



The euro made a sharp turn after the Fed meeting, taking advantage of the weakening of the greenback. This was due to the central bank's actions, which led to an increase in demand for high-yield assets, while politicians focused on curbing inflation. However, the euphoria in the markets did not last long, especially among euro bulls. Economic problems in the European Union, primarily related to gas supplies, put serious pressure on the euro. The cherry on the cake was the fall of the EU economic sentiment indicator. It should be noted that this indicator fell to 99 points in July, which is worse than the predicted 102 points. At the same time, the level of consumer confidence in the eurozone decreased to -27 from the previous -23.8.

An additional factor of pressure on the euro was the preliminary assessment of the German harmonized consumer price index. In July, this indicator showed an increase of 8.5% Y/Y, which is higher than the previous value of 8.2%. At the same time, the annual CPI of the eurozone was 7.5%. Against this background, the EUR/USD pair fell to a threatening low of 1.0113 ahead of the release of macro data from the US, but later managed to recover.

The US monetary authorities just published the first estimate of GDP for the second quarter, which did not meet market expectations. The reason is the contraction of the American economy by 0.9% in annual terms. According to current reports, US GDP has been declining for the second consecutive month. In such a situation, experts declare the onset of a technical recession.

Many economists are sure that at the moment the US economy is gripped by this kind of recession. However, the volume of decline in the American economy (by 0.6% over the past two quarters) is not so frightening compared to the European one. According to analysts, this failure is the result of budget cuts, not a consequence of higher rates. Recall that changes in monetary policy are not immediately noticeable, but their effect manifests itself in about six months. According to the results of the fourth quarter of 2022, you can see the results of current decisions, experts summarize.

In such a situation, the Fed is able to sharply slow down the pace of rate hikes and quickly move to easing the monetary policy. However, this is unlikely now. High inflation, which the central bank is struggling with, requires a tight monetary policy. If negative trends increase in the first quarter of 2023, the US economy may plunge into recession, analysts warn.

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Oil rises in price at the close of the trading session on Friday



As of 20:09 GMT+3, the price of September futures for Brent crude grew by 2.73% to $110.06, October futures - by 2.24% - to $104.11 per barrel, September futures for WTI — by 2.82%, to $99.14. September Brent crude is trading above $110 a barrel for the first time since July 5.

Pressure on quotes is exerted by fears of a recession in the global economy and, accordingly, a decrease in demand for energy resources. At the same time, experts warn that the supply of oil on the market may be insufficient.

Craig Erlam, senior market analyst, noted that oil prices are rising again amid reports that OPEC+ will leave production targets unchanged next month when they meet on Wednesday.

At the same time, since the beginning of the month, quotes have decreased by 4.5% for Brent and 6.6% for WTI. Demand concerns intensified in the markets amid recession risks.

Earlier Friday, Baker Hughes, an American oil and gas service company, released weekly data on the number of operating oil rigs in the US. In the week to July 29, their number increased by six units compared to the previous week and amounted to 605 units.

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American stock indices fell during trading



Investors are also evaluating a new batch of quarterly reports from major US companies. The value of the Dow Jones Industrial Average by 16:45 GMT+3 fell by 0.93% - to 32493.3 points.

The leader of the decline in the index, in addition to Caterpillar, are papers Boeing Co., falling by 2.6%. Only 5 out of 30 companies included in the indicator calculation are trading in positive territory, including Amgen Inc. and Cisco Systems Inc.

Standard & Poor''s 500 has dropped 0.57% since the market opened to 4095.17 points.

The Nasdaq Composite fell 0.4% to 12,319.41 points.

Shares of Uber Technologies jumped 13.7%. The taxi and food delivery company posted a loss again in the second quarter of 2022, although its revenue more than doubled, beating analysts' forecasts.

Papers Activision Blizzard rise in price by 0.2%. The American video game developer in April-June reduced revenue for the third quarter in a row, but the figure was higher than the market forecast.

Quotes of papers Marriott International increase by 0.5%. The operator of the world's largest hotel chain posted a 61% increase in net income in the second quarter on the back of a recovery in the travel industry, with adjusted figures and revenue well above expectations.

Shares of Cowen Inc. rise in price by 7.6%. Canadian Toronto-Dominion Bank has agreed to acquire a US investment bank in a $1.3 billion deal as it continues to expand its presence in the US market.

Capitalization of Caterpillar falls by 5.2%, the company is the leader of decline in the Dow Jones index. The manufacturer of equipment for road construction and mining in the second quarter increased its net profit by 18.4%, but the revenue was slightly worse than experts' expectations.

Market value of KKR & Co Inc. decreases by 4.7%. The American investment firm posted a net loss in the second quarter of 2022 and cut its distributable earnings (cash that can go towards paying dividends) by about 9%.

DuPont de Nemours Inc. fell 1.7%. The American chemical company posted a sharp increase in its second-quarter net income and a 7% increase in revenue, but its third-quarter guidance disappointed investors.

The price of Arconic securities decreases by 7.4%. The American producer of aluminum products in the second quarter of 2022 received a net profit and increased revenue better than market expectations, but worsened its forecast for the year.

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Pound signed the death warrant. And the policy of the Bank of England has nothing to do with it.



The main topic of the day is the increase in interest rates in the UK. If the Bank of England goes on the biggest rise since 1995, the pound will skyrocket. However, its euphoria will be short-lived. Why?

BoE is not omnipotent

Today, the British central bank once again intends to raise interest rates. This will be the sixth increase since December last year.

Recall that at each of its previous meetings on monetary policy, the BoE made a minimum step of 25 bps.

The market is now expecting more hawkish action from the BoE as UK inflation continues to break records. In June, it accelerated to a 40-year high of 9.4%, and so far there is no sign of a peak.

The situation is also aggravated by gloomy forecasts for further price hikes. Many economists are predicting inflation to rise to double digits this year.

In June, the BoE said it would act more decisively if inflationary pressures in the country become more sustainable.

According to analysts, now the BoE has no choice but to fulfill its promise, especially since its colleagues are not dragging their feet.

Since the beginning of the year, the US Federal Reserve has already raised rates four times, and twice - by 75 bps at once.

The European Central Bank only started tightening last month, but its first step was to raise the rate by half a percentage point.

Compared to other central banks, the BoE's policy looks more dovish now. This weakens the pound, as a result of which the cost of living in the country continues to increase.

In order to prevent inflation from taking root in the British economy, the BoE is likely to be forced to go for the largest rate hike in 27 years.

According to many currency strategists, a rise of 50 bps to 1.75% could significantly strengthen the pound's position against the dollar.



GBP/USD is expected to rise above 1.2170 today after the BoE meeting. However, the pound's rise will be short-lived.

The BoE, which launched the tightening mechanism much earlier than other central banks, delayed the process too much, and this allowed the inflation monster to become very strong.

Now, to defeat the monster, a 50 bps increase won't be enough. Inflation will not start to disappear, as if by magic, and BoE can no longer afford a larger increase in the current situation, when the country's economy is on the verge of a recession.

Far from beautiful

The threat of a recession that hangs over the UK economy is the main argument that the BoE will not risk raising rates by 50 bps at today's meeting.

Some experts expect the BoE to continue to act cautiously, as it has been extremely pessimistic in its latest economic growth forecasts. Recall that the central bank does not expect the UK economy to recover until 2025.

If the central bank does indeed raise rates by just 25 bps this month, despite rising inflation, that would further weaken the pound in the near term.

As for the pound's dynamics in the long term, it does not depend at all on what pace of tightening British officials choose now, UBS is certain.

Swiss bank analysts believe that the future of the pound is already predetermined, and it is not at all rosy. According to their forecasts, this year the GBP will fall to historical lows amid an exacerbation of the gas crisis.

According to UBS, Russia will continue to use energy exports as the main means of pressure on the West. The reduction in the supply of Russian blue fuel will cause huge and irreparable damage to the economies of Europe and the UK.

Electricity bills on the peninsula are expected to rise even more by mid-autumn, leading to another surge in inflation in the country and exacerbating the cost-of-living crisis.

In addition, the pound's growth will be limited by the uncertain political environment in the UK.Recall that Prime Minister Boris Johnson resigned in early July, and now the Conservative Party faces a long search for a successor.

Considering all the negative background that will put strong pressure on the British currency in the next few months, UBS sharply lowered its forecast for the GBP/USD pair.

Analysts expect the pound to fall against the dollar to 1.15 in the fourth quarter. The pound was trading at about this level two years ago when the COVID-19 pandemic shook global markets.

The Swiss bank's forecast is rather surprising, as most other experts believe that the currency will stay at 1.22 until the end of the year as the BoE raises interest rates sharply.

UBS also believes that even the biggest increase in almost three decades this month will not give the pound a solid boost and, moreover, will not serve as a long-term driver for it.

Analysts predict that the pound will be able to recover against the dollar only next year. So, the GBP/USD pair will still be trading at the level of 1.18 in the first quarter, and by June it will be able to rise to the level of 1.20.

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American stock indices rise during trading



The number of Americans who first applied for unemployment benefits increased by 6 thousand last week and reached 260 thousand people, according to a report from the US Department of Labor. Analysts, on average, also expected a rise to 260k from the previous week's previously announced level.

For clear guidance, investors should also wait for US nonfarm payrolls (NFP) data for July, expected to reach 250K, up from 372K earlier. It is also important to monitor the global reaction to China's strong military exercises near Taiwan.

The US trade deficit fell by 6.2% in June to $79.6 billion, according to the country's Department of Commerce. According to the revised data, in May, the negative trade balance amounted to $84.9 billion, and not $85.5 billion, as previously reported. Experts on average expected a decline to $80.1 billion.

The value of the Dow Jones Industrial Average by 16:47 GMT+3 rose by 0.03% - up to 32821.17 points.

Standard & Poor's 500 added 0.1% to 4159.39 points.

The Nasdaq Composite increased 0.4% to 12,719.37 points.

U.S. health insurance and services company Cigna Corp. posted a 6% increase in net income in the second quarter and improved its guidance for the full year of 2022. Its shares are up 3.7%.

eBay Inc. stocks cheaper by 4.9%. The world's largest online auction recorded a net loss in the second quarter of 2022 and reduced revenue. However, the latter figure, along with adjusted earnings, beat market expectations.

Papers of Booking Holdings Inc. drop by 4%, although the company that owns various travel planning services returned to profitable levels in the second quarter of 2022 as the market recovered from the coronavirus pandemic.

American oil company ConocoPhillips increased its net profit by 2.5 times in the second quarter due to rising oil prices and increased production and announced its intention to increase payments to shareholders by $5 billion, that is, up to $15 billion. Meanwhile, its shares are depreciating by 1.1%.

Share price of WeWork Inc. decreases by 4.8%. The American co-working service reduced its net loss in the second quarter of 2022 and increased revenue by more than a third, but the figures fell short of analysts' expectations.

Papa John's International is down 1.7%, although the pizza chain owner returned to profitability in the second quarter of fiscal 2022 with a modest increase in revenue and an increase in annual dividends.

Shares of Shake Shack Inc. fall by 13.8%. The American fast food chain again suffered a loss in the second quarter of the current fiscal year, and the company's revenue increased weaker than expected.

Walmart Inc. shares are down 0.3%. The nation's largest retailer is laying off hundreds of corporate management employees as part of a plan to restructure operations.

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EUR/USD: dollar maintains momentum, euro difficult to recover



The US currency started the week quite cheerfully, trying to maintain the positive momentum received after the release of the Nonfarm Payrolls data. At the same time, the euro cannot boast of similar dynamics, demonstrating pendulum dynamics.

The euro is once again teetering on the brink of falling, while trying to settle in the positions it has won. However, these actions are not always successful as the USD continues to dominate the market. At the same time, according to reports on the dollar index (USDX), investors are showing bearish sentiment against the US currency. Over the past two weeks, market participants have reduced their positions on USD growth after a long build-up. A continuation of the current trend can lead to a short-term drawdown of the greenback.

Currently, the greenback is trying to gain a foothold in the upward trend, and not without success. Its rise was catalyzed by impressive US employment data. Against this backdrop, markets expect more decisive action from the Federal Reserve in terms of tightening monetary policy. Recall that, according to reports, 528,000 jobs appeared last month in the US economy, and the unemployment rate fell to 3.5%.

According to economists, positive data on US employment revived the hopes of traders and investors about a significant increase in the key rate (by 75 bps) at the Fed's September meeting. Note that strong data on employment growth in America came as a surprise to the markets. Most experts expected opposite results, referring to recent studies on the onset of a recession in the US economy and to a slowdown in economic growth in the country.

For the time being, however, fortune favors the greenback. After the release of Nonfarm Payrolls, the dollar confidently overtook the euro. The EUR/USD was trading near 1.0186 on Monday morning, August 8, trying to return to last week's highs near 1.0200.



Note that after the release of the US employment report, the EUR/USD pair plunged sharply to the critical 1.0170, but later managed to recover. Against this background, some experts are optimistic about the immediate prospects for the euro. According to preliminary calculations, in the coming months, the euro may be in an upward trend, despite the threat of a recession in the European economy. The reason is the increased risk appetite in global markets. Against this background, experts believe that the fair rate of the EUR/USD pair is close to 1.1400. Analysts' conclusions are based on the difference in rates in the US and Germany. At the same time, experts do not exclude another fall of the euro to parity with the dollar.

This week, investors are focusing on US inflation data. The release of the July consumer price index is scheduled (the preliminary forecast provides for an increase of 0.2% in monthly terms) on Wednesday, August 10. The markets will get acquainted with the US producer price index on Thursday, August 11. This indicator is crucial for the further dynamics of the interest rate. Recall that the positive report on employment in the US opened the way for the Fed to aggressively tighten monetary policy.

According to experts, having received confirmation of the strengthening of the US economy, investors will return to long positions on the dollar. This will give an additional impetus to the latter and set up traders for an extreme tightening of monetary policy by the Fed.

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US stock market closed mixed, Dow Jones up 0.09%



At the close of the New York Stock Exchange, the Dow Jones rose 0.09%, the S&P 500 fell 0.12%, and the NASDAQ Composite fell 0.10%.

The leading performer among the components of the Dow Jones index today was Walt Disney Company, which gained 2.48 points or 2.33% to close at 109.11. Quotes Dow Inc rose by 0.66 points (1.28%), ending trading at 52.15. Walgreens Boots Alliance Inc rose 0.49 points or 1.26% to close at 39.48.

The biggest losers were JPMorgan Chase & Co, which shed 1.41 points or 1.22% to end the session at 114.35. Visa Inc Class A was up 2.55 points (1.18%) to close at 213.32, while McDonald's Corporation was down 2.43 points (0.94%) to close at 256. .80.

Leading gainers among the S&P 500 index components in today's trading were Penn National Gaming Inc, which rose 5.56% to hit 36.05, Gap Inc, which gained 5.44% to close at 10.27, and also shares of General Motors Company, which rose 4.16% to close the session at 37.56.

The biggest losers were Tyson Foods Inc, which shed 8.40% to close at 80.10. Shares of NVIDIA Corporation lost 6.30% and ended the session at 177.93. Enphase Energy Inc lost 4.38% to 287.74.

Leading gainers among the components of the NASDAQ Composite in today's trading were Helbiz Inc, which rose 114.64% to 1.61, TOP Financial Group Ltd, which gained 102.66% to close at 20.57, and also shares of Karuna Therapeutics Inc, which rose 71.84% to end the session at 241.19.

Shares of Reata Pharmaceuticals Inc became the leaders of the decline, which decreased in price by 32.61%, closing at 24.06. Shares of Uniqure NV lost 27.02% to end the session at 18.64. Quotes of Nuzee Inc decreased in price by 24.32% to 0.84.

On the New York Stock Exchange, the number of securities that rose in price (2119) exceeded the number of those that closed in the red (1018), while quotes of 123 shares remained virtually unchanged. On the NASDAQ stock exchange, 2399 companies rose in price, 1436 fell, and 229 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 0.66% to 21.29.

Gold futures for December delivery added 0.79%, or 14.15, to $1.00 a troy ounce. In other commodities, WTI September futures rose 1.51%, or 1.34, to $90.35 a barrel. Brent oil futures for October delivery rose 1.37%, or 1.30, to $96.22 a barrel.

Meanwhile, in the Forex market, the EUR/USD pair remained unchanged at 0.13% to 1.02, while USD/JPY advanced 0.05% to hit 135.04.
Futures on the USD index fell 0.20% to 106.28.

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Tailwind: the pound seeks to sail away from the political and economic turmoil



The British currency remains relatively calm this week, expecting, along with the US, a report on the consumer price index in America. An additional factor of pressure for the pound was the thunderclouds on the political horizon of the UK, due to the election of the prime minister.

Markets are focused on the election race in the UK, the favorite of which is Liz Truss, the foreign secretary. She claims the place of Boris Johnson, who was forced by the Conservative Party to resign as prime minister and its leader. The important points of the election program of Truss were the rejection of family benefits and tax cuts for citizens. In addition, the Minister of Foreign Affairs proposed to limit the influence of the Bank of England on the country's economy.

Many analysts assess the current political situation in the UK as a crisis, which is exacerbated by economic turmoil. Recall that last week, the BoE raised interest rates by 50%, but this had little effect on inflation in the country. It should be noted that the central bank began the fight against inflation in December 2021 and since then has systematically raised rates at each of the subsequent six meetings. As a result, by the beginning of the summer, inflation in the UK amounted to 9.4%. According to the BoE's forecasts, it will peak in October, soaring to 13.3%. Against this background, by the end of 2022, the UK economy will enter a recession that will last five quarters.

However, many experts disagree with this view. Currency strategists at Oxford Economics assess the risks of a recession as small, despite the current instability. According to economists, in 2023 the key rate cut by the BoE is more likely. At the same time, the central bank's actions aimed at reducing rates are slowing down economic activity in the UK. Against this backdrop, the GBP is under tremendous pressure, risking to collapse, currency strategists at Societe Generale believe.

At the end of July, the British currency showed growth, waiting for the Federal Reserve to abandon the overly aggressive tightening of the monetary policy. However, this did not happen. On the contrary, the US central bank is quite resolute, and it is supported by the hawkish mood of US officials. Against this background, the pound's recovery was interrupted, releasing the latter into free swimming on the waves of the financial market. The pound has slipped 10% against the dollar since the beginning of this year, placing it in the top three worst currencies among the G-10. The reason is the low pace of rate hikes by the BoE compared to the Fed's anticipatory actions.

According to analysts at Societe Generale, in the near future, the pound will fall to its lowest level since the collapse at the beginning of the COVID-19 pandemic. Additional pressure on the pound is created by the BoE's recent announcement about a possible recession and growing expectations of another rise in interest rates in the US (by 75 bps). In such a situation, the pound may sink to 1.2000 and below. If the bearish trend for the pound continues, the GBP/USD pair will fall to 1.1400-1.2000, according to Societe Generale.

The pair was close to 1.2100 on Tuesday, August 9 and even peaked at 1.2130, but failed to consolidate on these positions. The GBP/USD pair was trading in the range of 1.2069-1.2070 on Wednesday morning, August 10. At the same time, the greenback showed mixed dynamics, as market participants expect July reports on the US consumer price index.



According to updated forecasts for the British currency, in the short term it will maintain support against the US. However, the high likelihood of interest rate cuts by the BoE in 2023 is putting downward pressure on the pound. At the same time, according to analysts at Oxford Economics, in the near future the central bank will raise interest rates amid galloping inflation, thereby contributing to the pound's growth. However, in the long term, the BoE may revise the current monetary strategy, according to Oxford Economics.

UK GDP data for the second quarter of 2022 will be released this Friday, August 12. According to preliminary estimates, this indicator is expected to slow down to 2.8% in annual terms. Against this background, pessimism dominates the markets. In addition, on a quarterly basis, GDP is projected at -0.2%. Earlier, an increase of 0.8% was recorded in the first quarter of 2022. If the current GDP turns out to be weaker than expected, then the pound's decline is inevitable.

The pound may be supported by the dollar's retreat across the entire spectrum of the market. In such a situation, the pound is able to stay afloat. According to preliminary forecasts, in the third quarter of 2022, the GBP/USD pair will remain close to 1.2000 and may reach 1.2200, and by the first quarter of 2023 it will rise to 1.2300.

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US stock market closes higher, Dow Jones gains 1.63%



At the close of the New York Stock Exchange, the Dow Jones rose 1.63% to a 3-month high, the S&P 500 rose 2.13% and the NASDAQ Composite rose 2.89%.

The leading performer among the components of the Dow Jones index today was Walt Disney Company, which gained 4.30 points or 3.98% to close at 112.43. Salesforce.com Inc rose 6.37 points or 3.50% to close at 188.61. Goldman Sachs Group Inc rose 11.29 points or 3.35% to close at 347.91.

The losers were Merck & Company Inc, which shed 0.33 points (0.37%) to end the session at 89.19. UnitedHealth Group Incorporated was down 0.46 points (0.09%) to close at 537.72, while Walmart Inc was up 0.27 points (0.21%) to close at 129. fourteen.

Among the gainers among the components of the S&P 500 in today's trading were Norwegian Cruise Line Holdings Ltd, which rose 11.82% to 13.53, Royal Caribbean Cruises Ltd, which gained 9.74% to close at 41. 67, as well as shares of Carnival Corporation, which rose 9.19% to end the session at 10.34.

The biggest losers were CME Group Inc, which shed 2.24% to close at 198.40. Shares of Dollar Tree Inc shed 1.76% to end the session at 165.97. Quotes Ralph Lauren Corp Class A fell in price by 1.29% to 95.52.

Leading gainers among the components of the NASDAQ Composite in today's trading were Bioatla Inc, which rose 83.10% to hit 6.61, Amyris Inc, which gained 41.92% to close at 3.25, and Infinity Pharmaceuticals Inc, which rose 39.19% to end the session at 1.03.

The biggest losers were Redbox Entertainment Inc, which shed 52.86% to close at 1.65. Shares of OPTIMIZERx Corp lost 30.02% and ended the session at 15.57. Quotes of IsoPlexis Corp fell in price by 30.00% to 2.10.

On the New York Stock Exchange, the number of securities that rose in price (2685) exceeded the number of those that closed in the red (468), while quotations of 102 shares remained practically unchanged. On the NASDAQ stock exchange, 2934 stocks rose in price, 819 fell, and 241 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 9.32% to 19.74, hitting a new 3-month low.

Gold futures for December delivery lost 0.28%, or 5.15, to hit $1.00 a troy ounce. In other commodities, WTI crude for September delivery rose 1.14%, or 1.03, to $91.53 a barrel. Brent oil futures for October delivery rose 0.74%, or 0.71, to $97.02 a barrel.

Meanwhile, on the Forex market, EUR/USD rose 0.88% to hit 1.03, while USD/JPY shed 1.63% to hit 132.93.

Futures on the USD index fell 1.09% to 105.10.

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The music did not play for long, the yen danced for a short time



The dollar is getting up from its knees after a crushing fall on Wednesday. The yen is currently feeling the greatest pressure from the greenback, which showed the strongest growth on the US inflation data the day before.

The market freaked out

By the end of the week, investors continue to digest the July statistics on US inflation. Recall that the data turned out to be cooler than forecasts, which caused a large-scale sell-off of the dollar.

Last month, annual inflation in the US fell from the previous value of 9.1% to 8.5%, although economists had expected the CPI to fall to 8.7%.

A significant easing of inflationary pressures has increased fears that the Federal Reserve may reduce the degree of its aggressiveness with respect to interest rates already at the September meeting.

The reaction of the market was lightning-fast and very emotional: the yield of US government bonds fell sharply, followed by a plunge in the dollar. The DXY index sank 1.5% to a low of 104.646 on Wednesday.

The dollar's weakness provided support to all major currencies, but the yen gained the most in this situation. The yen soared by more than 1.6% against its US counterpart, to a mark of 135.

The dollar is gaining momentum

After a loud fall on Wednesday, the yield of 10-year US government bonds turned towards growth yesterday. It rose by 3.41% during the day and reached a new high of 2.902%.

The sharp increase in the indicator again widened the gap between the yields of US treasury bonds and their Japanese counterparts.

The yen, which is very sensitive to this difference, could not resist the pressure and moved to decline.

The USD/JPY pair managed to recover by 0.12% to 133.19 on Thursday. It was also supported by the general strengthening of the dollar.



The greenback grew by 0.1% against its main competitors. Its index remained almost unchanged and stayed at 105.2 during the day.

Yesterday's comments by Federal Reserve members contributed to the reversal of the yield of US government bonds and the dollar. Despite the slowdown in inflation in July, the tone of officials still remains hawkish.

Neil Kashkari, president of the Federal Reserve Bank of Minneapolis, said that the latest CPI data did not change his expectations about the Fed's future course.

In addition, he stressed that the central bank is still very far from declaring victory over inflation.

The head of the San Francisco Federal Reserve, Mary Daly, was in solidarity with her colleague. She also does not rule out the continuation of the Fed's hawkish policy, unless, of course, the next portions of macro data will favor such a sharp increase.

Recall that the key Fed's goal is to bring interest rates from the current level of 2.25–2.5% to 4% by the end of the year.

Some analysts believe that the central bank will try to solve this problem as soon as possible, and predict another rate increase of 75 bps at a meeting in September.

Why does the yen have no chance?

This year the dollar index rose by 10%. The greenback received such a solid increase thanks to the aggressive policy of the Fed.

Since March, the US central bank has raised interest rates by 225 bps. This makes it the undisputed leader: none of the major central banks can compete with the Fed in the pace of tightening.

But the biggest divergence in monetary policy right now is between the US and Japan. Despite the global increase in rates, the Bank of Japan is still bending its line and continues to keep the rate at a low level.

The priority for the Japanese central bank is not to fight inflation, but to restore the economy, which has been hit hard by the COVID-19 pandemic.

Unlike the US and EU, which have already managed to get out of the crisis caused by the coronavirus, the Japanese economy is just beginning to show signs of recovery.

According to preliminary estimates, in the second quarter, Japan's annual GDP could show growth of 2.7%, which is in line with pre-pandemic indicators.

Statistics on the gross domestic product will be published on Monday. But even if the data turns out to be positive, it most likely will not affect the policies of BOJ Governor Haruhiko Kuroda in any way.

Many experts are inclined to believe that the head of the BOJ will not give up his commitment to a super-soft monetary rate. The main argument in its favor now will be the low wages remaining in the country.

At this stage, salaries in Japan are far behind the rate of inflation, which undermines the purchasing power of citizens.

Another big reason to keep rates low is the coronavirus statistics. Japan is at the epicenter of a new COVID-19 outbreak, posing a major threat to the world's third largest economy.

According to economists at the Japan Research Institute, the BOJ's position can be changed to hawkish only after Kuroda leaves his post.

Given that he is due to retire no earlier than April 2023, one can estimate how long the downward trend promises to be for the yen.

Analysts at the Finnish bank Nordea predict that the USD/JPY pair will continue to strengthen on the tight policy of the Fed and reach the level of 140 in the foreseeable future.

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Forex Analysis & Reviews: US stocks closed higher, Dow Jones up 1.27%



At the close of the New York Stock Exchange, the Dow Jones rose 1.27% to a 3-month high, the S&P 500 rose 1.73% and the NASDAQ Composite rose 2.09%.

The leading performer among the components of the Dow Jones index today was Walt Disney Company, which gained 3.88 points or 3.30% to close at 121.57. Merck & Company Inc rose 2.09 points or 2.35% to close at 91.02. Apple Inc rose 2.15% or 3.63 points to close at 172.12.

The biggest losers were Johnson & Johnson, which shed 1.84 points or 1.10% to end the session at 165.30. Amgen Inc was down 0.04 points (0.02%) to close at 248.39, while Visa Inc Class A was up 0.25 points (0.12%) to close at 211. .33.

Leading gainers among the S&P 500 index components in today's trading were Broadridge Financial Solutions Inc, which rose 7.93% to hit 183.19, Albemarle Corp, which gained 5.98% to close at 281.60, and also shares of Penn National Gaming Inc, which rose 5.90% to close the session at 37.70.

The biggest losers were Illumina Inc, which shed 8.40% to close at 208.32. Shares of PerkinElmer Inc lost 1.89% to end the session at 157.91. Quotes of Organon & Co decreased in price by 1.34% to 30.99.

Leading gainers among the components of the NASDAQ Composite in today's trading were Embark Technology Inc, which rose 84.80% to hit 1.07, Twin Vee Powercats Co, which gained 77.50% to close at 7.10. as well as AN2 Therapeutics Inc, which rose 64.66% to close the session at 19.38.

The drop leaders were Performance Shipping Inc, which shed 44.88% to close at 0.34. Shares of PLx Pharma Inc shed 36.68% to end the session at 1.64. Quotes of Imac Holdings Inc decreased in price by 33.36% to 0.63.

On the New York Stock Exchange, the number of securities that rose in price (2517) exceeded the number of those that closed in the red (588), while quotes of 123 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,762 companies rose in price, 988 fell, and 200 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 3.32% to 19.53, hitting a new 3-month low.

The consumer sentiment index of the University of Michigan, which reflects the degree of household confidence in the US economy, according to preliminary estimates, rose to 55.1 points in August from 51.5 points in July, with an expected increase to 52.5 points.

Gold futures for December delivery added 0.53%, or 9.55, to hit $1.00 a troy ounce. In other commodities, WTI crude for September delivery fell 2.63%, or 2.48, to $91.86 a barrel. Brent oil futures for October delivery fell 1.69%, or 1.68, to $97.92 a barrel.

Meanwhile, on the Forex market, EUR/USD fell 0.57% to 1.03, while USD/JPY edged up 0.39% to hit 133.52.

Futures on the USD index rose 0.54% to 105.56.

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Dollar took revenge after the euro rose. Will the EUR/USD pair get stuck in a bearish swamp?



The US currency is full of energy, which it has shown during the rise in the EUR/USD pair. However, experts do not exclude that the European currency will be able to outperform its competitor, but only in a short run. According to experts, at the moment the greenback is one of the most reliable assets that have confirmed the status of a safe-haven currency. The US currency was near a weekly high on Tuesday, August 16, while many key currencies remained under pressure. The reason is the deterioration of global economic data, which increased the risks of a recession.

Against this backdrop, the euro rate against the dollar reached six-week highs, exceeding the psychologically important milestone of 1.0200. The euro traded above the indicated level at the beginning of this week, but then fell to the critical 1.0157. The EUR/USD pair showed the effects of a collapse on Tuesday morning, August 16, hovering near 1.0160 amid strong USD buying pressure.



According to analysts, in the near future the single currency will be supported by the weakening of the greenback and the easing of China's monetary policy. Earlier, the euro strengthened to its highest level in the last month, soaring after the release of data from the US Bureau of Labor Statistics. The reason is the likelihood of lower inflationary pressures.

However, many experts are pessimistic about the medium and long-term prospects for the euro. Currency strategists are sure that the trend towards the weakening of the single currency will last until the end of 2022 - the beginning of 2023. Fueling the fire are fears of a recession as Germany's energy crisis deepens. The specialists expect a long downward trend in EUR due to energy problems and economic disunity in the euro bloc countries. According to forecasts, in the short term, the EUR/USD pair will head towards 0.9600. Experts also allow the euro to stagnate against other world currencies.

However, the single currency's chances to win back will increase if the European Central Bank raises the key rate by 50 bps at the September meeting. In such a situation, a short-term rise in the euro in the range of 1.0400-1.0500 is possible. The euro will be supported by the reduction of interest rates by the People's Bank of China (PBOC). This measure will be aimed at strengthening the national economy, experts emphasize. Recall that on Monday, August 15, the market faced disappointing statistics on business activity in China, which included industrial production, retail sales and investment in fixed assets. Against this background, investors preferred to invest in the dollar, saving their capital due to increased concerns about the growth of the global economy.

The mass exodus of markets in USD is also due to the expectation of the release of the minutes of the FOMC meeting, scheduled for Wednesday, August 17th. According to analysts, the document may contain information demonstrating the Federal Reserve's intentions regarding future rate hikes. This minutes is able to influence the market assessment of the September Fed rate hike, which will ultimately affect the greenback's dynamics.

In a recent Fed speech, it was noted that "a significant change in interest rate policy" is still far away. However, such changes are not far off, Barclays economists believe. The bank's specialists adhere to the current forecast for the interest rate, which provides that the central bank will increase it by 50 bps in September, and in November and December 2022 it will be reduced to 25 bps. The current minutes of the Fed's meeting, due out on Wednesday, will be a turning point for determining the near-term outlook for the market amid uncertainty about monetary policy and how to fight inflation further.

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American stock indices change weakly and in different directions



As it became known from the report of the US Department of Commerce, the number of houses, the construction of which was started in the country in July, decreased by 9.6% compared to the previous month and amounted to 1.446 million in annual terms. The figure was the lowest since February last year. According to the revised data, in June the number of new buildings amounted to 1.599 million, and not 1.559 million, as previously reported. Experts predicted a decline to 1.54 million from the previously announced level in June.

US industrial output rose 0.6% month-on-month in July, doubling the 0.3% rise expected by analysts. According to the revised data, industrial production did not change in June, while a decrease of 0.2% was previously reported.

Production in the processing industry increased by 0.7% compared to June, while experts expected a more moderate growth of 0.2%. A month earlier, the indicator fell by 0.4%, and not by 0.5%, as previously reported. In addition, investors are waiting for the publication of the minutes of the July meeting of the Federal Reserve on Wednesday and the report on retail sales in the US on Friday. Also this week, many leading US retailers publish quarterly reports.

AJ Bell financial analyst Danny Hewson noted that many US investors have taken a wait-and-see attitude, hoping to get new information from the Fed's minutes and retailers' reports, on the basis of which it is possible to understand what exactly consumers are saving on during a period of high inflation.

The value of the Dow Jones Industrial Average by 16:47 GMT+3 increased by 0.05% - up to 33930.76 points.

Standard & Poor's 500 has fallen 0.11% since the market opened to 4292.49 points.

The Nasdaq Composite dropped 0.35% to 13,081.46.

Shares of Walmart Inc. jumped by 5.5%, being the leader of growth in the Dow Jones index. The largest US retailer posted a strong quarterly report and improved its full-year outlook. Walmart's adjusted earnings for the fiscal quarter ended July 31 were $1.77 per share, above analysts' forecast of $1.62 per share. Revenue increased by 8.4% and reached $152.86 billion, while experts on average predicted the figure at $150.99 billion.

Quotes Home Depot Inc. increase by 1.4%. The US-leading home improvement chain posted record revenues and net income in the quarter, even though the number of purchases at its stores fell by 3%.

Target and Lowe's will report on Wednesday, while department store chain Kohl's will report on Thursday.

World Wrestling Entertainment's share price is up 3.2% after the wrestling tournament organizer increased net profit and revenue slightly more than market expectations in the second quarter of 2022.

Shares of Warner Bros. Discovery shed 0.3% on rumors of new cost-cutting measures. In particular, the staff of the subsidiary streaming service HBO will be reduced by about 14%.

Zoom Video Communications' capitalization fell 5.6% after Citi analysts downgraded the recommendation for the company's shares to "sell" from "neutral" levels.

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Wall Street stocks closed lower



The minutes also indicated that Fed officials saw no convincing evidence of easing inflationary pressures in July, suggesting inflation could take longer than expected to slow down.

In an effort to curb inflation, the Fed has already raised its key interest rate by 225 basis points this year. After the release of the protocols, traders in futures linked to the Fed rate estimated its increase by 50 basis points as more likely.

Before the release of protocols, the market was already trading with a significant decline. Growth indices were under pressure due to the weak results of Target's retail chain.

As a result of trading on Wednesday, the Dow Jones Industrial Average fell 0.5% to 33980.32 points, the S&P 500 - 0.72% to 4274.04, and the Nasdaq Composite - 1.25% to 12938.12 points.

Target Corp. stock quotes. decrease by 2.2%. The company, which owns the second-largest discount store chain in the US, posted a nearly 10-fold drop in net income in the second financial quarter due to forced markdowns that hurt its margins.

Shares of TJX Cos. rise in price by 0.4%. The American chain of discount stores in the 2nd quarter of fiscal 2023 increased its net profit by 3%, but revenue fell short of expectations.

Price of Lowe's Cos. grows by 2.1%. The company, which owns the second-largest home improvement store chain in the US, saw a 1% drop in net income in the second quarter of fiscal 2022, but the per-share figure was better than market expectations.

Papers Krispy Kreme Inc. cheaper by 11.9%. The American chain of coffee shops, known for its donuts, cut its net loss in the 2nd fiscal quarter by 4.5 times, increasing revenue by 7.5%. Meanwhile, the company noted that consumers faced unique economic pressures in the past quarter and downgraded its forecasts for the current fiscal year.

The share price of Endo International Plc increases by 0.8%. An international pharmaceutical company has filed for bankruptcy in a US court to deal with its debt load due to litigation related to the so-called "opioid case".

Published by the US Department of Commerce, statistical data indicated that retail sales in the United States in July did not change in monthly terms.

Analysts polled on average predicted an increase of 0.1%.

Sales rose 0.8% in June, up from the 1% previously announced, according to revised data.

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Yen - cover: the dollar broke the chain



Yesterday, the greenback showed a parabolic growth against the yen. The USD rocket rise continues on Friday morning. Dollar aims to renew monthly peak against Japanese currency.

Hawk fuel for USD

The greenback showed convincing growth on all fronts on Thursday. Its index rose by 0.12% and reached the highest value for the month - a mark of 107.6.

The Federal Reserve minutes, which were published on Wednesday, served as a powerful driver for the dollar.

The minutes of the July meeting of the FOMC showed that at this stage the majority of the members of the US central bank are in favor of continuing the aggressive monetary course.

The greenback received even greater impetus yesterday after an interview with the president of the Federal Reserve Bank of San Francisco, Mary Daly.

The official told CNN reporters that it is still too early to declare a victory over inflation and it would be appropriate to raise the interest rate by 50 or even 75 bps in September.

Recall that after the release of the minutes, futures markets took into account the fears of FOMC members about the impending recession and reduced the likelihood of raising rates by 75 bps next month up to 40%.

However, Daly's comment stirred up the water again. For many, it has become obvious that we should not completely rule out the possibility of a third consecutive increase in rates by 75 bps.

Despite the risk of a slowdown in economic growth and an easing of inflationary pressures in July, the Fed may once again deliver a hawkish surprise. Such a scenario is very fertile ground for the dollar.

Increasing pressure on the JPY

The discrepancy between the US Fed's aggressive stance and the ultra-loose monetary policy of the Bank of Japan has led to a serious drop in the yen this year.

The JPY has fallen 15% against the dollar since January. This is the strongest decline of the Japanese currency against the USD since 2013.

Despite the recent recovery, the yen is still struggling to come off a 24-year low. And apparently, in the near future it will not shine.

Strengthening hawkish sentiment on the Fed's future strategy pushed USD/JPY yesterday to a 3-week high of 136.38.



This morning, the asset continues to move steadily upward to a monthly peak of 137, as additional pressure on the yen comes from the release of inflation statistics in Japan.

As the report showed, inflation in the country continues to remain above the BOJ target, which is 2%. In July, the core consumer price index on an annualized basis jumped to 2.4% against the June value of 2.2%.

This is the highest figure since the end of 2014. The inflation rate in Japan has risen for the past four months in a row.

Despite the fact that price pressure continues to increase, this is unlikely to force the BOJ to change its rhetoric.

Today, the Japanese central bank is the only one among the major central banks that still adheres to dovish tactics.

While its peers are actively fighting inflation by raising interest rates, the BOJ keeps the figure at an ultra-low level of 0.1%.

The head of the Japanese central bank, Haruhiko Kuroda, has repeatedly stated that the current inflation is due to rising commodity prices, which indicates its temporary nature.

In addition, inflation in Japan remains relatively low compared to other major countries. For this reason, Tokyo is in no hurry to raise interest rates so as not to harm its already fragile economy after the COVID-19 pandemic.

Fighting inflation Japan is now helping government measures to limit price increases. Through this, and through planned wage increases, the authorities hope to generate robust consumer demand that should help the economy recover.

Nevertheless, experts believe that wage growth, no matter how strong it may be, will not be able to catch up with inflation, which risks accelerating to 3% by the end of the year.

Japan is forecast to see further depreciation of the yen, an increase in the cost of living and a significant reduction in consumer spending until the BOJ begins to take really effective measures to combat inflation.

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US stock markets opened 0.5-1% lower



In the absence of important statistics, investors are looking at quarterly reports and other corporate news, as well as statements from Fed officials.

The value of the Dow Jones Industrial Average by 16:54 GMT+3 fell by 0.71% - to 33758.39 points. Among the leaders of the decline in the index are the shares of Boeing Co., Walt Disney Co. and Salesforce Inc., depreciating more than 2%. Merck & Co. papers are the growth leader, rising in price by 1%.

Standard & Poor's 500 has fallen 1.03% since the market opened to 4239.44 points. The Nasdaq Composite fell 1.58% to 12,760.13 points.

Shares of Deere & Co. fell by 2.9% after the world's largest manufacturer of agricultural machinery and equipment reported a net profit growth in the 3rd financial quarter, weaker than market expectations and worsened its full-year forecast.

Quotes from US sportswear and footwear retailer Foot Locker Inc. soared by 22%. The company published a strong statement for the past financial quarter and announced the resignation of the chief executive officer.

The market value of General Motors Co. rises 2.1% on news that the company will resume paying quarterly dividends, suspended in April 2020 due to uncertainty caused by the COVID-19 pandemic.

Bed Bath & Beyond plunged 42% after reports that prominent billionaire investor Ryan Cohen sold his entire stake in the retailer for a profit of more than $58 million.

Capitalization of Home Depot Inc. declined 0.6% despite the fact that the board of directors of the home improvement chain has approved the launch of a $15 billion share buyback program.

The head of the Federal Reserve Bank of St. Louis, James Ballard, said on Thursday that he could support another rate hike by 75 basis points at the September meeting of the US Central Bank. At the same time, he added that, in his opinion, the economy has not yet overcome the peak of inflation.

Meanwhile, San Francisco Fed colleague Mary Daly said that to curb inflation, the rate needs to be raised to just above 3% by the end of the year, but opposed an aggressive tightening next year.

The market is still waiting for a 50 basis points rate in September, however, there are growing fears that the rate will be raised by 75 basis points.

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US stock market closed lower, Dow Jones down 1.91%



At the close in the New York Stock Exchange, the Dow Jones fell 1.91%, the S&P 500 fell 2.14%, and the NASDAQ Composite fell 2.55%.

Procter & Gamble Company was the leading gainer among the components of the Dow Jones in today's trading, shedding 0.40 points (0.27%) to close at 149.33. Quotes Johnson & Johnson fell by 0.59 points (0.35%), ending trading at 167.59. Chevron Corp lost 0.79 points or 0.50% to close at 156.90.

The losers were shares of Intel Corporation, which lost 1.54 points or 4.35% to end the session at 33.84. Salesforce.com Inc. shares rose 3.69% or 6.79 points to close at 176.98, while Walt Disney Company shed 3.50% or 4.20 points to close at 115.94.

Leading gainers among the S&P 500 index components in today's trading were The Mosaic Company, which rose 3.44% to hit 55.36, Albemarle Corp, which gained 2.12% to close at 275.75, and shares of CF Industries Holdings Inc, which rose 2.07% to close the session at 105.64.

The biggest losers were Warner Bros Discovery Inc, which shed 7.43% to close at 12.71. Shares of Aptiv PLC lost 7.28% to end the session at 96.22. Quotes of CarMax Inc decreased in price by 6.66% to 89.86.

Leading gainers among the components of the NASDAQ Composite in today's trading were Bright Minds Biosciences Inc, which rose 72.80% to 2.16, Anpac Bio Medical Science Co Ltd, which gained 66.01% to close at 0 .36, as well as Summit Therapeutics PLC, which rose 48.18% to close the session at 1.63.

The biggest losers were Advanced Emissions Solutions Inc, which shed 39.78% to close at 3.86. Shares of Pharvaris BV lost 34.07% and ended the session at 12.14. Quotes of Golden Sun Education Group Ltd decreased in price by 29.18% to 36.01.

On the New York Stock Exchange, the number of securities that fell in price (2581) exceeded the number of those that closed in positive territory (554), while quotes of 112 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,905 stocks fell, 867 rose, and 206 remained at the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 15.53% to 23.80.

Gold futures for December delivery lost 0.84%, or 14.75, to hit $1.00 a troy ounce. In other commodities, WTI October futures rose 0.06%, or 0.05, to $90.49 a barrel. Brent oil futures for October delivery fell 0.07%, or 0.07, to $96.65 a barrel.

Meanwhile, in the Forex market, EUR/USD was down 0.90% to hit 0.99, while USD/JPY was up 0.42% to hit 137.50.

Futures on the USD index rose 0.72% to 108.88.

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US stocks closed lower, Dow Jones down 0.47%



At the close of the New York Stock Exchange, the Dow Jones fell 0.47%, the S&P 500 fell 0.22%, and the NASDAQ Composite fell 0.03%.

Chevron Corp was the top gainer among the components of the Dow Jones index today, up 5.09 points or 3.24% to close at 161.99. Quotes of Caterpillar Inc rose by 5.45 points (2.84%), closing the session at 197.21. Dow Inc rose 1.21 points or 2.22% to close at 55.62.

The biggest losers were Procter & Gamble Company, which shed 2.88 points or 1.93% to end the session at 146.45. Home Depot Inc climbed 1.70% or 5.31 points to close at 306.90 while UnitedHealth Group Incorporated shed 1.61% or 8.77 points to close at 535 .80.

Leading gainers among the S&P 500 index components in today's trading were Halliburton Company, which rose 6.95% to hit 31.22, Occidental Petroleum Corporation, which gained 6.90% to close at 73.79, and shares of Schlumberger NV, which rose 6.61% to close the session at 39.36.

The biggest losers were shares of Twitter Inc, which shed 7.32% to close at 39.86. Shares of Pool Corporation shed 3.72% to end the session at 360.63. Quotes Healthpeak Properties Inc fell in price by 3.16% to 26.93.

Leading gainers among the components of the NASDAQ Composite in today's trading were Reviva Pharmaceuticals Holdings, Inc., which rose 53.04% to 1.49, Windtree Therapeutics Inc, which gained 52.21% to close at 0. 70, as well as shares of China Index Holdings Ltd., which rose 42.86% to close the session at 1.00.

The drop leaders were WeTrade Group Inc, which shed 39.02% to close at 3.22. Shares of Golden Sun Education Group Ltd lost 38.06% and ended the session at 21.99. Quotes of Bright Minds Biosciences Inc decreased in price by 38.43% to 1.33.

On the New York Stock Exchange, the number of securities that rose in price (1,552) exceeded the number of those that closed in the red (1,531), while quotes of 123 shares remained virtually unchanged. On the NASDAQ stock exchange, 1897 companies rose in price, 1846 fell, and 197 remained at the level of the previous close.

Shares in Occidental Petroleum Corporation surged to a 3-year high, rising 6.90% or 4.76 points to close at 73.79.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 1.30% to 24.11.

Gold Futures for December delivery added 0.71%, or 12.35, to $1.00 a troy ounce. In other commodities, WTI October futures rose 3.62%, or 3.27, to $93.63 a barrel. Brent futures for October delivery rose 3.81%, or 3.68, to $100.16 a barrel.

Meanwhile, in the Forex market, the EUR/USD pair was unchanged 0.28% to 1.00, while USD/JPY fell 0.51% to hit 136.76.

Futures on the USD index fell 0.47% to 108.47.

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GBP/USD: "Disappointing" pound at the peak of undervaluation



There is a paradoxical situation in the dynamics of the British currency. The pound, which is teetering on the brink of failure and periodically tests low levels, is considered by many experts to be undervalued. This factor helps the pound "float" out of the deepest price drops.

This week, the British currency was actively declining against the USD, trying to develop a bearish rally. As a result, the pound traded near two-year lows, stepping over the 1.1700 support level from time to time. GBP/USD managed to move towards consolidation later this week, breaking a four-day streak of declines and climbing above 1.1800. However, in the short term, pound bears will lose out due to lack of appetite for risk. At the same time, many investors prefer selling GBP, fearing the strengthening of energy problems in the country.

After the release of reports on inflation in the UK, short positions on the British currency intensified. According to reports for July, the consumer price index in the country reached 10.1%, being the highest since 1982. Citi Bank analysts estimate that inflation in the UK will soar to a record 18.6% in January 2023. The reason is a significant increase in prices for blue fuel. According to experts, British inflation will be the highest since the 1979 oil crisis, when its level corresponded to 17.8%. Under such a scenario, the purchasing power of the population will drop sharply. This will trigger a further economic downturn, hurting household finances in the UK.

However, many experts believe that Citi Bank's forecast is extreme, and even the intensification of the energy crisis in the country is unlikely to lead to a sharp round of inflation. This scenario is at odds with the baseline consensus forecast, which assumes inflation to rise to 11.9%, and the Bank of England's estimate (which assumes inflation to rise to 13%). The latter option is quite possible if the new British prime minister introduces another fiscal stimulus.

The current situation has a negative impact on the pound's dynamics, which remains under pressure. The GBP/USD pair cruised near 1.1835 on the morning of Thursday, August 25, gaining momentum. The pound is looking to recoup previous losses with varying degrees of success.



Additional pressure on the dynamics of the GBP has increased fears about the onset of a recession in the UK in the third quarter of this year. In such a scenario, the BoE will have to revise its current monetary policy and slow down the key rate hike. Analysts estimate that the pound is now negatively correlated with interest rates, as the risk of a recession is more important than the potential tightening of monetary policy by the BoE.

On the side of the bears of the British currency - a long-term strengthening of the greenback, which is fueled by the confidence of market players in the further tightening of monetary policy by the Federal Reserve. In addition, investors are convinced that the central bank is set for a significant rate hike in September (by 50-75 bps). The Fed's hawkish stance on this issue will send the dollar to new highs. However, risky assets, including the British currency, will come under pressure. Against this background, experts recommend holding short positions on the GBP/USD pair with 1.1500 as the target.

Currency strategists at the investment bank JPMorgan also adhere to the downward trend against the pound. Analysts expect the pound to fall against the dollar to its lowest level in two years. The reasons are the strengthening of the recession in the UK and the aggravation of the energy crisis due to problems with gas supplies. Against this background, the pound risks falling to 1.1400, the level that was recorded in March 2020.

According to JPMorgan economists, in 2022 the British currency fell by 12% against the US, and this is not the limit. The current situation has made the pound one of the worst G10 currencies in terms of spot returns. However, JP Morgan does not rule out a further recovery of the pound in 2023.

According to experts, risk appetite, the decline in the role of the USD and a fair assessment of the pound stand out among the catalysts for the potential growth of the GBP. Many analysts believe that the pound's undervaluation is a key factor that can prevent its further fall. Over the past 15 years, the deviation of the GBP/USD pair from fair value did not exceed 20%. Currently, the pound is at the peak of undervaluation (by 19.3%). According to experts, the pound may fall even more and remain underestimated for a long time.

According to analysts, the pound retains the potential for further decline, which is possible in the short and medium term planning horizons. The pound may be supported by increased risk appetite and the withdrawal of the greenback from its leading position. However, in light of the strengthening USD, this is unlikely. The pound's appeal for investors is possible amid falling real rates in the US, but now this is unattainable. At current levels, assets denominated in GBP look very cheap for foreign investors, experts conclude.

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