The week of July 14–18 was notable due a first disinflationary CPI print for the long time. Kevin Warsh’s first congressional testimony, big-bank earnings, a soft PPI report, and a record TSMC quarter that failed to revive the semiconductor rally. The dynamics of a stock market in general was mixed with some names showing a decent growth (such as Goldman Sachs, for example), while momentum high beta stocks (such as IBM) displaying a record monthly decline.
Performance of momentum stocks. Source: Bloomberg.comThe S&P 500 holds at peaks, with volatility staying relatively quiet most of the week, but VIX had reached 18 on Friday, which is close to a threshold of 20 – the border between the confirmed bullish market and neutral market condition.
As Bloomberg noted, equities traders appeared “largely unfazed” by the whirlwind — but, again, the performance of stocks remains mixed ahead of earnings season. The energy and financial sectors lead the rally this week, holding S&P500 at peaks, while the tech sector corrects, pushing Nasdaq down and lifting volatility across the board.
The breakdown of US CPI and PPI
June CPI fell -0.4% MoM — the first one-month decline in six years — with headline inflation easing to 3.5% from 4.2%. Core CPI annual rate slipped to 2.6%. Fed rate hike odds for July fell to ~83% probability of them being kept unchanged.
US CPI — June 2026 disinflation surprise. Source: https://www.cnbc.com/2026/07/14/consumer-price-index-inflation-report-june-2026.htmlUS PPI, on the other hand, fell -0.3% vs flat expected. Warsh testified before the Senate and noted that the FED had no tolerance for elevated inflation.
July hike probability fell to 10%. At the same time, the probability of a hawkish scenario for September’s meeting of the Fed had decreased to almost 40% from 50%. The US dollar reacted with a decline, though yields of 30-year bonds still hold around 5.1%.
Currently, there’s equilibrium in expectations around interest rate scenarios for September: both scenarios are considered as equally probable, and markets await the new information to come amid a highly uncertain geopolitical situation.
Probabilities of different interest rate scenarios for September 2026. Source: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.htmlAI rally stalls amid mixed reaction of the market
The most prominent event within the week, other than CPI publication, was the earnings report of Taiwan Semiconductor (TSM).
TSM reported record profit in the second quarter, showing +77% growth to roughly $22B , which raises it for 36%. The outlook points to over 40% growth. Despite that, the Nasdaq index fell for 0.4% after the publication and extended its losses on the Asian session of Friday.
TSM, Daily chart. Source: Exness.comMiddle East: the latest development
The situation in the Middle East escalates, as the US and Iran exchange airstrikes, there are no signs of deescalation as of now. WTI Crude oil, however, reverted back to $80 and the price action was trimmed.
The related behavior of the price was expected as previously, the price had passed the 200-day moving average, and the usual pattern is the rotation of the price around this area ($76-80 price area).
Currently, the price of Crude oil futures don’t show any signs or weakness, as the conflict holds, and hawkish statements of Fed’s officials support it at achieved levels. According to the short-term energy outlook from eia.gov, the target price of Brent for 2026 is expected to stay around $80, with the further decline to $65 in 2027.
Usually, those projected targets act as rotational centers for the price of the future contracts.
STEO forecast. Source: eia.govNews in focus for next week
- Ongoing: Middle East oil bid and July 29 FOMC meeting.
- July 23: Interest rate decision from ECB.
Now let’s shift to potential scenarios and trading ideas for the remainder of the week.
XAUUSD
Gold gets whipsawed — rebounded on CPI, but later has given away the news-related gains, continuing to move inside of the downward swing. The position of the price is close to the lower band of the Bollinger Bands: the price may slide below to the $3800–3900 area, after which it may rebound higher, back to the psychological level of $4000.
XAUUSD, daily chart. Source: Exness.comCADCHF
As Crude oil is being supported by ongoing tensions in the Hormuz Strait, Canadian dollar gets in play, and we observe the promising price action for CADCHF currency pair. Swiss franc was one the safe haven currencies in 2026, but now SNB starts verbal and financial interventions to prevent it from excessive growth. Now, the long-term trading range is being tested, and should the price break the upper border of a massive triangle, it may continue moving higher as shown on the chart.
CADCHF, daily chart. Source: Exness.com
