This marks the highest reading since December last year, although the trend remains that it has been 30 consecutive months since the index has been above its long-term average of 98. With the US elections coming up in the months ahead, I wouldn’t anticipate too strong a bounce in sentiment given the relative uncertainty. That alongside some softness already evident in the jobs market.
This article was written by Justin Low at www.forexlive.com.
Crude oil has been on an
incredible run since bottoming out around the $72.50 level in early June. The
market eventually caught up to the positive drivers we had back then with the OPEC+’s
extension of voluntary output cuts, and the pickup in economic activity seen
from the global PMIs. The prospects of
major central banks easing their policies was also a contributor for the
positive future demand outlook.
More recently, the price got
rejected from a key resistance level and eventually extended the drop following
a soft US
NFP report. We basically have an economy that is slowing but still growing.
We will see if the market will be able to keep the positive sentiment on soft
landing hopes or start to worry about a recession.
Crude Oil
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that crude oil got rejected from the 84.50 resistance
and extended the drop following the soft US NFP report. From a risk management
perspective, the buyers will have a better risk to reward setup around the 80
support zone. The sellers, on the other hand, will want to see the price
breaking below the 80 support to increase the bearish bets into the 77 level
next.
Crude Oil Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price recently dropped below the minor trendline that was defining the bullish
momentum. This technically signals a switch in momentum with the sellers in a
near-term control. We can also see that we have the 38.2% Fibonacci
retracement level of the entire rally from the lows standing around the key
support. That’s been a key level for the market.
Crude Oil Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see more closely the recent price action. We have a nice resistance around the 82.70
level where we can also find the 38.2% Fibonacci retracement level of the drop
from the 84.50 level.
From a risk management
perspective, that’s where the sellers will likely step in with a defined risk above
the resistance and position for a drop into the key 80 support with a better
risk to reward setup. The buyers, on the other hand, will want to see the price
breaking higher to regain some control and start targeting a break above the
84.50 resistance. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have Fed Chair Powell testifying to Congress and the markets will be
focused on any view or hint about monetary policy after the recent NFP report.
Thursday will be the most important day of the week as we get the US CPI and
the US Jobless Claims figures. Finally, on Friday, we conclude the week with
the US PPI and the University of Michigan Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
iFX EXPO Asia 2024, the world’s premier
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*FinTech – Thailand | Statista Market Forecast
This article was written by FL Contributors at www.forexlive.com.
👋 Hello traders and investors! This is Itai Levitan from ForexLive.com, bringing you the latest technical analysis and trade ideas for Light Crude Oil Futures. Let’s dive into the current market setup and discuss potential strategies for your consideration.
Oil futures trend analysis 📈
We are observing an interesting pattern with Light Crude Oil. Recently, oil pierced a significant trend line, attempting a breakout but ultimately failing. This breakout attempt was aligned with the first upper standard deviation of the Volume Weighted Average Price (VWAP) anchored from the beginning of 2023. Given this failed breakout, it appears that the bears might have an upper hand at the moment.
Market response at 84 USD TO 85 USD 📉
Following the failed breakout, we have seen an initial decline of over 1%. This movement is critical as it sets the stage for a potential entry point.
Trade idea – short oil 🎯
Entry point
This entry point is very close to the current market price and provides a strategic position based on the recent technical behavior.
Stop loss
The primary stop is set just above the $84.00 level to protect against further upward movements. Traders preferring a tighter stop can opt for $83.70, which is still above the upper standard deviation but offers a more favorable risk-reward ratio.
Take profit targets
These targets are strategically placed. The first target allows for partial profit-taking, reducing risk exposure as the trade progresses. Subsequent targets provide opportunities to capture additional profits as the market moves in our favor.
Risk-reward analysis
By averaging out the take profit targets, we achieve a balanced and favorable risk-reward ratio. This setup allows for substantial profit potential while managing risk effectively.
Trade tips 📝
Remember, this analysis and trade idea is an orientation for you to consider. Always trade at your own risk and perform due diligence before entering any positions. Stay tuned to ForexLive.com for additional insights and perspectives. Happy trading!
Thank you for reading, and good luck! 🍀
This article was written by Itai Levitan at www.forexlive.com.
It’s good that his remarks are focusing on their goals and not sidetracked by the election. And it also speaks to which camp he is on I guess, since the June decision was supposedly „finely balanced“ even if the vote was 7-2.
This article was written by Justin Low at www.forexlive.com.
According to the EU’s Copernicus Climate Change Service (C3S), 2024 is on course to rank as the hottest year on record as climate change continues to push temperatures to record highs so far this year. They are pinning it as an approximately 95% probability that this year will beat the record set in 2023 last year.
If so, that will mean temperatures recorded globally this year will be the hottest since such records began in the mid-1800s.
C3S is out with the statement after last month ended up being the hottest June month on record.
Besides the obvious from climate change, El Nino hasn’t helped in relieving the world from the heat this year. The phenomenon is said to warm the surface waters of the eastern Pacific Ocean, leading to a rise in global average temperatures.
Global warming might not impact markets directly but as the above trend continues, it is worth taking notice. These sort of weather conditions do have an impact on certain commodities and in terms of demographics, it also impacts consumer behaviour to a certain extent.
It’s the simple things like:
This article was written by Justin Low at www.forexlive.com.
It isn’t anything that we don’t already know. Knot also adds that the date in which they must meet the inflation target must not slip beyond 2025. Well, we’ll see. I mean, they have a knack of kicking the can down the road.
This article was written by Justin Low at www.forexlive.com.
The USD weakened across the
board last Friday following the soft US
NFP report. The data showed some more labour market cooling with an
increase in the unemployment rate and a decrease in wage growth. We basically
have an economy that is slowing but growing. We will see if the market will be
able to keep the positive sentiment on soft landing hopes or start to worry
about a recession. All eyes will now be on the US CPI and US Jobless Claims figures on Thursday.
The CAD, on the other hand,
gained last week against the US Dollar mainly because of the risk-on sentiment as
the US data continued to support at least two rate cuts from the Fed but didn’t
send recessionary signals. For the CAD, the next big event will be the CPI
report on July 16th. We saw another jump in wage growth in the
latest labour
market report, so the BoC will likely need good CPI figures to deliver a
rate cut in July.
USDCAD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDCAD has recently dropped back to the bottom of the range at the key
1.36 support
zone where the price bounced off of last Friday.
The buyers will likely keep
on stepping in around these levels to position for a rally back into the 1.3785
resistance with a better risk to reward setup. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
new lows with the 1.35 handle as the first target.
USDCAD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price action remains rangebound between the 1.36 support and the
1.3785 resistance. There’s not much to do here and the market participants will
likely keep on “playing the range” until we get a breakout.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that the price broke out of the recent downward minor trendline that was defining the bearish
momentum before bouncing from the support. This could be a signal of a change
in momentum.
The buyers will want to see
the price breaking above the most recent lower high at 1.3643 to increase the
bullish bets into the 1.3785 resistance. The red lines define the average daily range for today.
Upcoming
Catalysts
This week is a bit bare on the data front but nonetheless we will have some key
economic releases. Tomorrow, we have Fed Chair Powell testifying to Congress
and the markets will be focused on any view or hint about the monetary policy
trajectory after the recent NFP report. Thursday will be the most important day
of the week as we get the US CPI and the US Jobless Claims figures. Finally, on
Friday, we conclude the week with the US PPI and the University of Michigan
Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
Tuesday
Fed Chair Powell will testify to the
Senate Banking Committee on Tuesday and the House Financial Services Committee
on Wednesday. The market participants will be attentive to any view or hint
about the monetary policy trajectory after the recent NFP
report.
The text is generally released before
the testimony so that will be scanned for clues or “bias”,
but the market will also be focused on the Q&A session following the
opening remarks. Given the recent data, Powell will likely lean on the dovish
side.
Wednesday
The RBNZ is expected to keep interest
rates unchanged at 5.5%. As a reminder, the central bank delivered a hawkish
hold at the last
meeting as they raised the Official Cash
Rate forecasts and pushed back the first rate cut to late 2025. The market
continues to expect 41 bps of easing by the end of the year.
Thursday
The US CPI Y/Y is expected at 3.1% vs.
3.3% prior, while the M/M measure is seen at 0.1% vs. 0.0% prior. The Core CPI
Y/Y is expected at 3.4% vs. 3.4% prior, while the M/M figure is seen at 0.2%
vs. 0.2% prior.
This is going to be an important release.
I think the Fed will be more dovish at the next meeting if we get a good
report. Then, if we get some more benign figures in August, Fed Chair Powell
will likely pre-commit to a rate cut in September at the Jackson Hole
Symposium.
The US Jobless Claims continue to be one
of the most important releases to follow every week as it’s a timelier
indicator on the state of the labour market.
Initial Claims remain pretty much stable
around cycle lows and inside the 200K-260K range created since 2022. Continuing
Claims, on the other hand, have been on a sustained rise recently with the data
printing new cycle highs every week.
This shows that layoffs are not
accelerating and remain at low levels while hiring is more subdued. This is
something to keep an eye on. This week Initial
Claims are expected at 240K vs. 238K prior,
while Continuing Claims are seen at 1860K vs. 1858K prior.
Friday
The US PPI Y/Y is expected at 2.3% vs.
2.2% prior, while the M/M measure is seen at 0.1% vs. -0.2% prior. The Core PPI
Y/Y is expected at 2.5% vs. 2.3% prior, while the M/M figures is seen at 0.2%
vs. 0.0% prior. I don’t expect this data to influence the market much given
that the sentiment will be set by the CPI report the day before.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
Generals always fight the last war and central bankers are going to continue to fight the ghost of inflation, even as it becomes increasingly clear that the inflationary threat is over and the bigger risk is recession.
On Thursday, ECB chief economist Phillip Lane noted that firms are telling them that wage pressures are coming down. Their wage tracker also shows much slower wage growth in 2025 and 2026. There won’t be any second-round effects.
With the benefit of hindsight, it will soon be clear that the past-pandemic inflation was a one-off perfect storm caused by:
We combined all three and all it got was 9% inflation. All it took to quell it were 5% rates.
Does that sound like a new inflationary normal, or a blip in a long disinflationary cycle?
To illustrate how insane the monetary policy was. This is what the Reserve Bank of Australia did:
They certainly weren’t alone as central banks the world over were caught in an easing mania — they went ‚full nuclear‘. Ten-year US note yields were below 2% for two years and below 1% for much of that. It was free money.
It was the same with governments. The US Paycheck Protection Program scam gave away $800 billion with minimal oversight. Much of that went straight into the pockets of small business owners. There were $850 billion in stimulus checks, followed by another $900 dose, enhanced unemployment benefits cost $680 billion. Compare that to the financial crisis, which authorized $700 billion in loans that actually had to paid back.
Finally, a great source of inflation via supply chains. All this money and low-interest lending was going to consumers who did things like decide to renovate, build fence and decks. Lumber prices went parabolic.
Supply chains were wrecked in autos, computer chips, consumer goods, meat, steel and dozens of other places.
Yet still: Just 9% inflation.
I’m not saying it wasn’t painful and I think the lags in measuring things like housing mean that inflation was more in the 12-15% range but it was a once-in-a-lifetime event.
Yet somehow central bankers are treating it like it was the start of a new normal. Compounding that insanity is that we’ve seen the dawn of generative AI in the past 20 months. That’s undoubtedly deflationary, something I talked about yesterday with BNNBloomberg (near the end):
I also wrote about it here.
When the economic history of the pandemic is definitively written, it will emphasize that it was a one-off event in a long, disinflatioary cycle that was worsened by central banks keeping rates too high for too long.
I believe this is a rare moment to lock in investments with high rates for a long duration in the same way that the pandemic was a once-in-a-lifetime to lock in low borrowing rates.
This article was written by Adam Button at www.forexlive.com.