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MTrading Team • 2024-06-25

Crude Oil hovers at two-month high ahead of US data, API inventories

Crude Oil hovers at two-month high ahead of US data, API inventories

The risk complex remains slightly positive early Tuesday despite the unimpressive data/events as traders brace for the month-end, as well as the quarter-end, consolidation amid a light calendar. The same exerts downside pressure on the US Dollar even as Monday’s mid-tier US data came in positive and the Federal Reserve (Fed) officials defend their hawkish bias.

EURUSD rose the most in more than a week, edging higher of late, while GBPUSD follows suit even as there prevails a lack of positive catalysts from the Eurozone and the UK, not to forget looming political anxiety. Further, USDJPY drops for the second consecutive day while extending the previous day’s retreat from a two-month high on softer yields and the US Dollar’s pullback, not to forget mixed Japan data and the growing concerns about the Bank of Japan’s (BoJ) rate hike in July.

AUDUSD prints a two-day winning streak amid firmer Aussie data and cautious optimism in the market. The NZDUSD, however, lacks momentum after posting a daily gain the previous day. Moving on, USDCAD drops to a three-week low, down for the eighth consecutive day, as growing discomfort in the global political set-up and China’s readiness for more stimulus propel prices of Canada’s main export item, namely crude oil. That said, Gold price fades bounce of two-week-old rising support as traders seek more clarity on the latest US Dollar moves amid a light calendar and a light news flow.

BTCUSD licks its wounds at a seven-week low after falling the most in two months the previous day. On the same line, ETHUSD stabilizes at the lowest level in five weeks while snapping a three-day losing streak. It’s worth noting that chatters about the ETF outflows and miners’ reserve concerns join the US SEC’s hard stand against the crypto majors to weigh on the Bitcoin and Ethereum prices. However, former US President Donald Trump’s plan to speak at the Bitcoin convention joins bullish whale activity to trigger the latest rebound in the prices.

Following are the latest moves of the key assets:

  • WTI Crude oil prints mild losses around $81.60 after rising to a seven-week high the previous day.
  • Gold reverses the week-start gains while declining to $2,325 by the press time.
  • The USD Index remains pressured at 105.40, extending the previous day’s pullback as we write.
  • Wall Street closed mixed even as Tech shares slumped while the Asia-Pacific shares edged higher of late. That said, equities in Britain and Europe remain indecisive during the initial trading hour.
  • BTCUSD and ETHUSD both recover from multi-day lows to $61,000 and $3,370 respectively at the latest.
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US Dollar ignores upbeat catalysts to pare previous gains…

Although Monday’s US Dallas Fed Manufacturing Index improved from a four-month low and most of the Fed officials defended the “higher for longer” rate bias, the US Dollar Index (DXY) snapped a two-day winning streak as traders pare previous gains on the monthly and the quarterly basis. In doing so, the Greenback also ignored the downbeat performance of equities, mostly the tech shares, after Nvidia’s slump.

It should be noted that the fresh geopolitical tensions surrounding China, Russia, and the Middle East put a floor under the US Dollar. That said, US President Joe Biden’s administration highlighted the national security risk while preparing investigations on China Telecom, China Mobile, and China Unicom. Further, Canada also announced a 30-day consultation on tariffs for Chinese Electric Vehicles (EVs). Meanwhile, China calls for the European Union (EU) to scrap tariffs on EVs by July 4.

On the positive side, Chinese Premier Li Qiang promoted the nation’s confidence and capability to achieve 5.0% growth.

That said, EURUSD rose the most in more than a week despite softer prints of German IFO survey data for June whereas GBPUSD managed to cheer upbeat prints of the UK’s CBI Trend Total Orders by reversing from a five-week low. Further, USDJPY retreated from a two-month high, staying pressured of late, as traders prepared for the BoJ’s July rate hike while ignoring softer prints of Japan Services PPI.

AUDUSD cheers better prints of Westpac Consumer Sentiment for June and optimism about China growth whereas NZDUSD lacks recovery momentum amid fears of softer economic growth in New Zealand. Further, USDCAD licks its wounds at a three-week low after declining for consecutive seven days as Crude Oil bulls take a breather at a two-month high. Apart from the firmer Oil prices, a reassessment of Bank of Canada (BoC) Governor Tiff Macklem’s comments also prod the Loonie pair sellers ahead of the second-tier US data.

WTI Crude Oil jumped to the highest level since late April the previous day as a softer US Dollar joined fears of a supply crunch and hopes of increasing demand from China. Further, expectations of witnessing another draw in the weekly inventory, per the American Petroleum Institute (API) also keep the black gold firmer.

Alternatively, Gold price fails to cheer the US Dollar’s weakness and rather pares the week-start gains amid the market’s indecision about the major central banks’ next moves on rates. Also challenging the XAUUSD bulls could be the latest shift in China’s gold-buying quest.

  • Strong buy: USDCAD, USDJPY, US Dollar, Silver
  • Strong sell: AUDUSD, NZDUSD, GBPUSD
  • Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
  • Sell: DAX, FTSE 100, EURUSD, Crude Oil

A slew of data will entertain intraday traders…

Be it Canada’s Consumer Price Index (CPI) or the US CB Consumer Confidence, not to forget US activity data from Chicago and Richmond Fed, the economic calendar is likely to entertain the momentum traders on Tuesday. Additionally, US housing market numbers and speeches from the Fed and ECB officials will also offer extra volatility to the market. It should be observed, however, that the cautious mood ahead of Thursday’s key Biden-Trump debate and Friday’s Fed inflation may restrict the US Dollar moves unless the scheduled catalysts fuel the hawkish Fed bias and renew the Greenback buying. That said, the Canadian Dollar may witness further buying if the Canadian inflation improves and the API reports more inventory draw in its weekly oil stockpile data.

May the trading luck be with you!