Crude Oil licks its wounds at six-week low amid dicey markets, focus on US data, API inventories

The risk complex remains mostly unclear after optimists returned to the table the previous day. The lack of momentum could be linked to a cautious mood ahead of this week’s top-tier data/events, as well as doubts about the major central banks’ next moves. However, the latest optimism in the US political frontier and a gradual run-up in yields help the riskier currencies to pare previous losses while also challenging the haven assets.

With this, the US Dollar Index (DXY) seesaws around 104.30 after snapping a two-day winning streak on Monday. However, EURUSD and GBPUSD reverse the week-start recoveries whereas USDJPY drops for the second consecutive day.

AUDUSD drops to a three-week low despite upbeat data at home while NZDUSD also tests the lowest level since early May during its four-day losing streak. Further, USDCAD remains firmer at the highest level in five weeks even as the Crude Oil, Canada’s main export item, pauses a three-day losing streak at the lowest level in more than a month.

Moving on, Gold price holds lower grounds during a five-day losing streak as traders consolidate the previous gains from the all-time high, as well as reduce haven demand for the yellow metal amid the US political optimism. It should be noted that China's woes also exert downside pressure on the bullion.

Cryptocurrencies appear to lack acceptance even as the US Securities & Exchange Commission (SEC) approved the first spot of Ether (ETH) ETFs to start trading from Tuesday (July 23, 2024). In doing so, the BTCUSD and ETHUSD also failed to cheer the US Dollar’s weakness amid fresh challenges to the previous optimism about Donald Trump’s US Presidential Election victory.

Following are the latest moves of the key assets:

• WTI Crude oil prods three-day losing streak at the lowest level in six weeks, mildly bid near $78.40 by the press time.
• Gold drops for the fifth consecutive day despite posting minor losses around $2,391 at the latest.
• The USD Index remains sidelined around 104.30 as we write, struggling to defend the week-start losses.
• Wall Street closed in the green while the Asia-Pacific shares edged lower. Further, equities in Britain and Europe trade mixed during the initial trading hour.
• BTCUSD and ETHUSD remain pressured after welcoming sellers the previous day, to $66,500 and $3,440 at the latest.

Mixed catalysts restrict Dollar moves amid pre-data anxiety…

Technology shares reversed Friday’s heavy losses the previous day despite gradual recoveries in the benchmark Treasury bond yields. The same joined receding political uncertainty in the US and a light calendar to help Wall Street close on the positive side while also exerting downside pressure on the haven assets like the US Dollar and Gold.

On the political side, US President Joe Biden’s exit from the presidential election race and Vice President Kamala Harris’s ability to take that spot of the Democratic Party removed the measure of uncertainty and helped renew the optimism. However, a lack of major data/events and enough time to face the election vibes, around 3.5 months, tamed the positive performance of the markets ahead of this week’s top-tier catalysts.

On Monday, ECB policymaker Peter Kažimír joined other decision-makers while suggesting further rate cuts, which in turn challenged the EURUSD buyers even as the major currency pair bounced off a one-week low to challenge the two-day losing streak. It’s worth observing that the Bundesbank’s careful consideration for rate cuts might have helped the quote. That said, the Euro pair retreats early Tuesday ahead of the preliminary readings of the Consumer Confidence figures for July, as well as US Existing Home Sales for June and Richmond Fed Manufacturing Index for July.

On the same line was the GBPUSD that paused a two-day losing streak before posting mild losses early Tuesday. The Cable pair’s latest retreat justifies the market’s fears about the UK government’s ability to push back the economic fears and defend the Bank of England (BoE) hawks when major central banks are all set to cut rates.

Elsewhere, USDJPY drops half a percent while extending Friday’s retreat from a seven-month-old support-turned-resistance. Although there aren’t many catalysts to justify the Yen pair’s latest fall, comments from the Secretary-General of Japan's ruling party Liberal Democratic Party (LDP) Toshimitsu Motegi, saying he thinks Bank of Japan (BoJ) policy should be made clearer, seem to weigh on the prices. Additionally, chatters about the BoJ’s efforts to defend the hawkish policy, contrary to growing concerns about the Fed rate cut, also keep the pair sellers hopeful.

Australia’s weekly print of the ANZ-Roy Morgan Consumer Confidence jumped to its highest in six months and reported the biggest jump since April 2021. However, AUDUSD and NZDUSD failed to cheer the upbeat data, like they ignored the People’s Bank of China’s (PBoC) rate cuts, amid concerns that China’s economic growth is losing momentum. Also challenging the Aussie and the Kiwi pair buyers are the talks about rate cuts from the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ).

Not only the AUDUSD and NZDUSD but the USDCAD also remains on the back foot and failed to benefit from the US Dollar’s retreat, especially amid softer Crude Oil prices and the market’s preparations for this week’s Bank of Canada (BoC) rate cut.

Crude Oil struggles to justify high summer demand as fears of slowing China’s energy consumption, despite heavy stimulus, join the increasing exports from Russia and OPEC to favor the sellers. With this, the black gold licks its wounds at the lowest level in six weeks after declining in the last three consecutive days. Additionally, Morgan Stanley’s forecast of witnessing the oil market surplus in 2025 and expectations of a build in the weekly inventories seem to exert downside pressure on the black gold prices despite the latest corrective bounce.

Gold appears bearing the burden of gradually rising Treasury bond yields and a receding rush for risk safety after the recent developments in the US political scenario. Also challenging the bullion buyers are chatters about China’s economic health. However, the dovish Fed woes and expectations of softer US data keep the precious metal on the bull’s radars.

• 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

Eurozone Consumer Confidence, mid-tier US data to entertain intraday traders…

Although the economic calendar is still in its nascent stage, the Eurozone’s first readings of July Consumer Confidence will help determine short-term EURUSD moves. Also important to watch will be the US Existing Home Sales for June and the Richmond Fed Manufacturing Index for July. Given the likely softer US data, in contrast to the expectedly upbeat EU statistics, the Euro pair may witness recovery. However, any surprise positives in the US statistics won’t hesitate to propel the US Dollar and exert more downside pressure on the major currencies and commodities like Crude Oil and Gold.

Additionally, the weekly Oil inventory, per the American Petroleum Institute (API), will also be important for the black gold traders as the energy bears flex their muscles even as the stockpiles have been depleting in the last few weeks.