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MTrading Team • 2023-06-12

Oil price remains bearish as cautious markets join oversupply fears

Oil price remains bearish as cautious markets join oversupply fears

Markets turn dicey, mostly cautious, as the all-important week comprising top-tier central bank decisions begins with higher yields. Adding strength to the sour sentiment can be the trader’s recheck of the previously dovish Fed bias as the US inflation and employment conditions remain tight despite the recently softer data.

The mixed mood joins the pre-Fed consolidation to allow the US Dollar to extend the previous day’s losses, which in turn joins headlines suggesting more Oil supplies to weigh on the Brent prices. Not only the Oil but Gold price also struggles to extend the previous week’s recovery.

That said, the firmer yields allow USDJPY to regain upside traction whereas NZDUSD drops the most among the G10 currency pairs as RBNZ-inspired hawkish mood fades ahead of NZ GDP. It should be noted that the downbeat Japan PPI and comments from a BoJ official also propel the Yen pair.

Elsewhere, BTCUSD remains pressured even as Bitcoin whales take the risk in anticipation of a rebound. Further, ETHUSD also prints losses after two-week downtrend.

Following are the latest moves of the key assets:

  • Brent oil drops over 2.0% to $73.50 at the last, down for the third consecutive day.
  • Gold price remains depressed around $1,960 as we write, after a two-week uptrend.
  • USD Index struggles to defend the early day gains near 103.50.
  • Wall Street closed with mild gains but the Asia-Pacific shares trade mixed. That said, the equities in the UK and Europe edge higher as we write.
  • BTCUSD and ETHUSD print minor losses near $25,800 and $1,740 respectively at the latest.
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Key week begins with mixed mood

While the traders show normal pre-event anxiety and rush to the US Dollar, the other traditional havens like bonds, Gold and Yen remain pressured. The same joins fears of the US-Iran deal and the slew of Oil output flowing into the energy market, after a long sanction period, to weigh on the black gold price. JPY fails to ignore downbeat PPI and comments from BoJ officials suggesting no change in this week’s monetary policy meeting while defending the ultra-easy policies.

On a different page, Asia-Pacific stocks struggle to gain traction amid Australia’s holiday and cautious mood ahead of the monetary policy meetings of the Fed, ECB, BoJ and PBOC, not to forget UK employment and US inflation data.

It should be noted that the commodity grinds lower and so do the Antipodeans but the US Dollar’s gains appear limited as traders doubt hawkish statements from the Fed.

Talking about the cryptos, fears of a slowdown in the once-favored markets grow amid SEC’s hard stand and the talks of recession. Even so, the big players take contra positions and put a floor under the prices of BTCUSD and ETHUSD.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

Softer start to the key week

Having witnessed the second-tier data from Japan and a holiday in Australia, the traders in the European and the US session may witness inactive sessions amid a light calendar ahead of Tuesday’s UK jobs report and the US inflation. However, the bond market moves should be carefully watched for clear directions ahead of Wednesday’s FOMC.

May the trading luck be with you!