PCE print and Nvidia earnings after the close are the week's biggest catalysts, with the dollar overstretched and gold near three-month highs.
Alpha Score of 73 reflects strong overall profile with strong momentum, weak value, strong quality, strong sentiment.
Oil benchmarks dropped nearly 5% on Tuesday after US Secretary of State Marco Rubio said the US will not initiate strikes on Iran, focusing instead on economic sanctions. Iran and Oman are closing in on a deal to facilitate flows through the Strait of Hormuz, Aaron Hill, chief market analyst at FP Markets, wrote in a note.
Spot gold traded near three-month highs just shy of $4,700. Hill said upside momentum paused at daily resistance of $4,660, with technical support around $4,579 and overhead resistance at $4,764. Gold is up nearly 15% month to date, aided by a fall in real US yields and the dollar trading near three-month lows.
Equity sentiment was positive, with Asia-Pacific shares catching a bid on lower oil and easing bond yields. Hill said he expects cautious action ahead of Nvidia's earnings report after today's market close. "I don't think it is a question of whether Nvidia beats estimates anymore; it's whether the company beats expectations by 'enough' to satisfy investors and keep the AI trade moving higher," he wrote. Nvidia snapped a seven-day losing streak on Tuesday. NVDA carries an Alpha Score of 70/100, labeled Moderate, and traded at $213.05, up 2.19% on the day.
The company's guidance points to about $91 billion in revenue and 75% gross margins, implying 90-99% annual growth. Hill said he is looking for revenue around $93.5 billion, or approximately 100% annual growth, noting that Nvidia has topped its own targets by about 3% almost every quarter for years.
In FX, the Canadian dollar continued to trade on the back foot against the US dollar as the US-Canada trade war heats up, with Canada announcing dollar-for-dollar retaliation. The Australian dollar was in focus after better-than-expected Australian CPI inflation at both headline and trimmed-mean levels.
US Treasury yields were lower across the curve amid the fall in oil and implications of Treasury Secretary Scott Bessent's plans for bond intervention.
The July US PCE price index is due at 12:30 pm GMT. Forecasts suggest the year-over-year headline number will ease to 3.6% from 3.7% in June, with an estimated range of 3.7% to 3.5%. The core reading is expected to remain unchanged at 3.3%. Hill said that with year-end Fed rate pricing having climbed to 22 bps of tightening from 17 bps a week ago, a broad miss in the data could trigger a further unwind in rate pricing, weighing on the US dollar. He also noted that the dollar is "overstretched to the upside in terms of positioning," which adds pressure to any unwind.
At the last meeting, the Fed left rates on hold at 3.50-3.75% for a fifth consecutive meeting, with three of 12 members voting for an immediate rate hike. Since then, St. Louis Fed President Alberto Musalem struck a hawkish note, saying price pressures are too high and that raising the target rate could avoid more aggressive action later. San Francisco Fed President Mary Daly described the Fed as being in a "good place" and does not envisage the jobs market feeding into inflation.
Other data released ahead of the PCE print includes July CPI and PPI inflation cooling, 23,000 jobs lost, and retail sales falling, Hill noted.
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