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On Monday, the US indices traded mixed. At the close, the Dow Jones rose by 0.2%, the NASDAQ Composite lost 0.5%, and the S&P 500 declined by 0.3%.
Yesterday, Germany said that inflation may jump. The Bundesbank predicts that inflation will rise above 2.5% which is above the ECB's target level. It will remain above 2% until at least mid-2022. US inflation data will be released at the end of the week.
As for the commodity market, oil prices are growing. Brent crude futures for November broke above the level of $80 on Tuesday. WRI is lagging slightly behind. It has reached $76, the high of 2018. Oil prices have finally returned to the pre-pandemic levels with prospects of further growth. Despite the constant increase in the new coronavirus cases, the world economy is expanding. This is why there was an increase in demand for commodities. At the same time, OPEC is in no hurry to raise oil production for its member countries.
The coronavirus is still raging in some countries. The number of new cases is high. There were 376,00 new cases yesterday, which was lower compared to last week. The US reports less than 100,000 cases a day. Yesterday, there were 81,000 cases. The death toll totaled 689, whereas last week the figure was 2,200.
The S&P 500 is trading at 4,443. it is likely to stay in the range of 4,000-4,470. The Federal Reserve Bank of Dallas' general business activity index for manufacturing in Texas significantly decreased to 4.6 from 9 in August. The report on US Manufacturing PMI will be released on October 1. Analysts predict that the reading will amount to 60% (the indicator above 50 shows expansion in the sector).
In the United States, the problem of public debt ceiling has suddenly escalated again. In Senate, republicans blocked the law on raising the public debt limit and financing the government. This law has already been passed in Congress. Thus, the US government may face again the prospect with funding on October 1. During the next two days, US policymakers are going to hold tough negotiations in order to reach a consensus.
Robert Kaplan, the president of the Federal Reserve Bank of Dallas, announced that he would resign just hours after Boston Fed President Eric Rosengren said he would leave his post. The media revealed that Fed officials were involved in large-scale stock trading." The Federal Reserve is approaching a critical point in our economic recovery as it deliberates the future path of monetary policy. Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve's execution of that vital work," Kaplan said in a statement.
Currently, trading in the equity market is unfolding quietly.
The US dollar index is trading at 92.30. It is likely to remain in the range of 92.00–92.60. It continues to consolidate near the upper limit of the range. So, it is likely to make an attempt to rise higher. During the week, the US dollar strengthened against the yen by 200 pips and fell against the Canadian dollar by about 200 pips. Yet, it managed to hold in the same range.
The USD/CAD pair is trading at 1.2600. It is likely to stay in the range of 1.2500–1.2650. The price is facing bearish pressure due to rising oil prices. So, it may decline to 1.2500.
The stock market is calm. There will be no important news today. Investors are waiting for a decline to buy shares.
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