By: IntegrityFX
Yesterday I called for US equity markets to make a move toward losses. We did not see that however, while oil fell on the day, gold was notable higher. Factor all of this in with the PPI number coming in twice expectations and you have the recipe for inflation. Normally, inflation would cause an increase in equity prices, at least nominally, and it did for today. However, since we do not see any potential for growth for quite some, the inflation effect will cause equities to fall. If this does occur we will see equities fall along with the dollar, it is commonly called stagflation. We remain bearish on equities and bullish on the US dollar for the time being. However, resistance for the S&P 500 does occur until 915, former support. 875 remains the bottom of the current trading range, so a break of this level would send risk aversion throughout the rest of the markets. In this event look to sell a yen cross.