The net short position in USD against major global currencies decreased by 4.2 billion over the reporting week, to -7.1 billion, the lowest level since April. The dynamics of positioning changes in the dollar suggest that it will continue to strengthen.

It is also worth noting that gold saw an increase of 2.4 billion, reaching 50.3 billion, while positioning in oil and copper became more bearish. Taken together, this may serve as an indicator of expectations for rising demand for safe-haven assets.

However, such an outlook would be accurate under normal conditions — and the current conditions are unusual. The anticipated meeting between the presidents of Russia and the United States in Alaska, preparations for which became known only recently, could completely shift the risk balance. In the event of successful negotiations, the dollar would receive a strong boost alongside risk assets. In case of failure and an increased likelihood of escalation, demand for safe-haven assets would surge, leaving the dollar's prospects unclear.

US President Trump has nominated Stephen Miran to fill a temporarily vacant seat on the FOMC. Miran, known as a Trump supporter, tends to downplay inflationary risks and intends to push for Federal Reserve reform. Markets perceive the very idea of reform as risky, so such appointments put some pressure on the dollar.

Markets currently see more than an 80% probability that the Fed will cut rates in September, and over a 40% chance of two more cuts before the end of the year. If this forecast materializes, the dollar will face challenges in continuing to strengthen. However, the opposite scenario is also possible — American importers paid more in tariffs for imports in the first half of the year than for all of 2024, despite unusually low import volumes after April's Liberation Day. A spike in US inflation seems inevitable, so the rate outlook is likely to be adjusted this week following Tuesday's release of July consumer inflation data. Forecasts call for a modest increase in inflation from 2.7% y/y to 2.8%, and core inflation from 2.9% to 3.0%. Given the degree of political confrontation between the Trump administration, which is advancing tariff changes and tax reforms, and financial circles that support the Fed and its chair Powell, a situation similar to last week's jobs report may occur — namely, inflation rising above forecasts, which would strengthen the case for keeping the Fed rate at its current level. In any case, risks remain very high.

As expected, the S&P 500 traded sideways over the past week.

The correlation between the dollar's exchange rate and stock indices is well known — the stronger the dollar, the greater the pressure on equity markets, and vice versa. At present, conditions favor a strong dollar. The CFTC report showed further shifts in sentiment among large investors, and the upcoming Putin–Trump meeting in Alaska will clearly go far beyond the Ukraine issue. Trump is trying to create division within the BRICS positions, as all major BRICS members — namely China, India, and Brazil — firmly reject US pressure on tariffs. If they manage to coordinate their stance, Trump will clearly be unable to achieve his objectives.

Uncertainty is extremely high, but one thing is clear — the dollar began strengthening even before the Alaska summit was announced, and the chances that the outcome of the negotiations will be favorable for the dollar remain significant. Based on this, we assume that the dollar will continue to strengthen across the currency market, while the S&P 500 will begin moving toward support at 6040.