Markets have been moving between contradictory narratives this week: the strong NFP print last week had boosted hawkish expectations for the US dollar, lifted yields of 30-year bonds and pressured Gold along with major currencies against the greenback. On the other hand, “sell America” narrative seems to step back as US stocks indices climb to new peaks, and corporate earnings start to roll in.

NVDA had reached 4 trillion dollars of market cap – the precedent between tech companies, TSLA climbed 7%, whereas Delta airlines had declined, though both Nasdaq and Dow Jones indices stayed within bullish rallies after short consolidations.

However, the main shift in the narrative has evolved in the rise of probabilities of the interest rate not changing in September for the US from 5% to over 30%. That is still far from parity yet and the main scenario of September is still a quarter a point decline. Though, the sell-off had stopped for the US dollar and we observe it regaining positions across the board against major currencies.

While Gold is trying to catch the upward momentum (without visible success), Crude oil displays weakness around the $68 price area and slides down, not being able to break through the 20-moving average ceiling, pushed down by the increased production output from Opec+ and revised STEO forecast from eia.gov.

Markets are looking forward to the publication of US inflation next week to assess the influence of the strong NFP on the retail prices.

Crude oil

 WTI Crude oil had rejected the 20-moving average area, having reversed off the $68 price area after the OPEC+ announcement about the upcoming production increase. The short-term energy outlook forecast from eia.org had lowered the expected fair price for CL futures based on supply and demand estimation for 2025 – the average price is projected around $60 with a possibility to drive lower.

COT reports show the increasing short position for commercial traders, which had almost reached the new bottom – a potential short signal for the oil.

Given the weak sentiment (we’ve seen the massive drop of oil futures after the resolution of Israel-Iran situation) and overall downtrend, we can project the downside move as shown at the chart.

Nasdaq

 While crude oil is declining, tech stocks are gaining momentum: Nasdaq had reached another all-time-high recently and that might not be over: according to statistical studies, it rarely reverses quickly above the upper Bollinger Bands line and the average swing duration is between 17 and 20 days (which gives us several days of potential continuation).

The earnings season fuels growth for many technological stocks, and the “sell America” narrative steps back, so we may see Nasdaq growing as shown in the chart below.

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