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Oil market: economic worries outweigh geopolitics Crude oil prices extend losses on Tuesday after a short-lived recovery in the second half of last week. Brent dipped below the $60 handle on Monday and reached lows around $59.50 ahead of European session today. Traders’ behavior shows that economic worries outweigh geopolitical concerns amid tanker attacks. The latest portion of dismal Chinese data added to the gloomy sentiment towards the outlook for the global economy. Industrial output growth in the world’s second largest economy unexpectedly slowed to a more than 17-year low. Meanwhile, the US Empire State Manufacturing Index dipped to -8.6 from 17.8 in May, the biggest slide for a data series that goes back to 2001. Unsurprisingly, the ugly numbers fueled fears of lower worldwide oil demand. In this context, the market participants will continue to closely monitor the incoming economic data and will also focus on the FOMC meeting that concludes on Wednesday. Should the central bank’s rhetoric come not as dovish as expected, the riskier assets, including oil, will come under pressure while the greenback will have a sigh of relief.
OANDA:BCOUSD
by HelenRush
Gold turns lower, Fed in focus After a brief jump to the highest levels since April 2018, gold prices turned negative on the day and finished the week up by just 0.05% as a result of a reversal. On Monday, the bullion remains under pressure as traders continue to digest strong US retail sales data that lifted the dollar nearly across the board. A spectacular retail sales report made investors trim their bets on a rate cut by the Fed and supported USD demand. As a result, the dollar index rose to nearly two-week highs late last week but switched to a subdued trading today. After a break above $1,1350, the precious metal attracted some profit-taking and may have formed a local top as the Fed’s tone may turn out not as dovish as expected. The two-day meeting, which concludes on Wednesday, will set the direction for gold for the second half of the week. Should the FOMC fail to provide support to the yellow metal, the prices could extend the retreat and get back below the $1,325 area. As long as the bullion remains above the 100-DMA around $1,300, the downside risks are limited.
TVC:GOLD
by HelenRush
Dollar awaits retail sales data The greenback was marginally higher against the European currencies and turned lower against the Japanese yen on Thursday. Suh a behavior shows that despite some improvement in risk sentiment, investors remain cautious against the backdrop of the ongoing US-China trade war and other geopolitical concerns. Today, the US retail sales is the key event of the day. Traders will assess the release very thoroughly in the light of recent Fed’s dovish hints and some weak economic data. It is widely expected that retail sales rebounded in May after a drop by 0.2% during the previous month. Industrial production data will important as well. Depending on the general economic picture, investors will further build their expectations on further Federal Reserve’s steps in monetary policy. Disappointing figures could fuel pricing in a rate cut this year amid worries about the potential consequences from the US-China trade war for the economy. In the dollar-negative scenario, EURUSD may easily get back above the 1.13 barrier and even challenge the 1.1350 area that caps the upside momentum these days. However, the potential rally could be short-lived as the greenback continues to derive some support as a safe-haven currency.
by HelenRush
Gold bulls inspired by tensions in Hong Kong and weaker USD After two days of a bearish correction, gold prices resumed the ascent and got back above $1,330 on Wednesday. Yesterday, the bullion briefly slipped to lows below $1,320 though trimmed intraday losses afterwards.  The precious metal derives support from a combination of risk aversion and a weaker dollar. Risk sentiment has deteriorated amid tensions in Hong Kong, where authorities postponed the second reading of a bill allowing extradition to mainland China as tens of thousands of protesters blockaded government headquarters.  Meanwhile, the greenback came under the selling pressure ahead of the US CPI data due later today. Should the figures disappoint and come in lower than expected, expectations of a rate cut by the Fed will rise further, which could fuel further USD sell-off and give the additional support to gold prices. In this scenario, the bullion may challenge the $1,337 figure, which is standing on the way to $1,340.
TVC:GOLD
by HelenRush
Gold: downside contained so far After a brief jump to nearly 14-month highs around $1,348, gold prices started to correct lower as the bullion attracted some profit-taking at interesting levels. On Tuesday, the precious metal is challenging the $1,324 barrier, a break of which could open the way towards the $1,320 support area. The recent aggressive rally in gold prices was driven by rising expectations of a rate hike by the Federal Reserve. By the way, some market participants are pricing in monetary policy easing during the meeting scheduled for next week. Such expectations are looking too dovish and this is a risk for the bullion as should the central bank refrain from cutting rates next Wednesday, the greenback may rise decently, while the yellow metal will further lose ground in this scenario. In the short term, meanwhile, the downside looks fairly contained due to the lingering uncertainty over the US-China trade dispute and some fears of slowing global growth. Technically, gold needs to hold above the $1,300 threshold in order to avoid a more aggressive bearish correction.
TVC:GOLD
by HelenRush
Oil prices attempt to stay afloat Crude oil prices registered the first weekly gain after two weeks of steep losses that brought Brent to five-month lows below the $60 handle. The market entered the bearish territory last week and found some bids as the general risk sentiment improved. As a result, Brent finished above $63 but struggles to extend the rebound on Monday as traders remain cautious. Riskier assets, along with oil futures, received a boost from two key factors. First, a softer rhetoric on the US-Mexico trade front has partially eased concerns over global trade wars, while lack of progress in the US-China negotiations capped the optimism. Second, a more dovish Fed’s stance increased the odds of the US monetary policy easing this year. In the short term, the market will likely try to stay afloat and refrain from another sell-off. But considering the lingering risks in the trade front, Brent could attract some profit-taking at more attractive levels. The immediate upside target now comes around the $64 threshold. Should risk sentiment remain relatively positive, the futures will be able to hold above $63 in the near term.
OANDA:BCOUSD
by HelenRush
EURUSD: elevated uncertainty ahead of US NFP report EURUSD rose yesterday after the ECB meeting was not as dovish as many feared. The pair briefly jumped above the 1.13 handle and has settled below the 100-DMA since then. On Friday, the euro is under some pressure again as dollar demand moderately picks up ahead of the major event of the week. Market participants are eagerly awaiting the US NFP employment report due later today, especially after the recent dovish hints from some Fed officials including Powell. There is high uncertainty ahead of the release as other job market indicators were mixed. In particular, ADP report was dismal, showing growth by just 27K, the lowest level since 2010. Meanwhile, the 4-week moving average of initial unemployment claims rose slightly to 215K, the ISM Non-Manufacturing Survey employment component rose sharply to 58.1 from 53.7 last month and ISM Manufacturing Survey employment component rose slightly to 53.7 from 52.4. Should the report show a solid rise by 185-200K, the greenback may appreciate across the board, if wages data comes strong as well. In this scenario, EURUSD could threaten the 1.12 handle once again.
by HelenRush
EURUSD nervous ahead of ECB meeting After a brief jump above 1.13, EURUSD turned lower on Wednesday following three days of gains and finished at daily lows around 1.1220. The pair volatility rose ahead of today’s ECB meeting as traders are nervously awaiting fresh signals from the central bank. Some market participants expect the regulator to announce new stimulus, citing the fact that the ECB has been missing its inflation goal. There are also fears that the monetary authorities will revise down their economic forecasts due to rising risks from the ongoing trade wars. If so, the common currency could get under additional selling pressure and reverse some of the recent gains. On the other hand, the potential downside momentum could be limited by a broader dollar weakness as traders continue to price in a rate cut by the Fed this year, especially amid mixed economic signals in the US. Technically, EURUSD could lose the 1.12 figure with the initial bearish target at 1.1170. Once below, the pair may challenge the .1130 area.
by HelenRush
Gold prices extend the rally Gold rallies for a fifth day in a row, with prices jumped above $1,335, touching a 3.5-month high on Wednesday. The ascent accelerated after a break above the 100-DMA and the $1,300 psychological resistance. Now, the bullion can target the $1,340 handle. The main driver behind the ongoing rally in the precious metal is a weaker dollar. The greenback faced selling pressure nearly across the board against the backdrop of a more dovish tone from the Federal Reserve officials. In particular, following Bullard’s hints at a rate cut on Monday, the Fed’s Powell said that the central bank will respond “as appropriate” to the risks posed by a global trade war and other recent developments. From the technical point of view, the gold bulls still have the overall advantage in the short term. On the other hand, failure to see a daily close above $1,335 could attract some profit-taking as the major upside barrier at $1,340 could deter the buyers as risk sentiment improves across the financial markets.
TVC:GOLD
by HelenRush
Dollar on the back foot ahead of Powell The greenback continues to retreat against the major rivals on Tuesday. EURUSD pair jumped to April 18 highs around 1.1275, where the 100-DMA lies. The pair sees the third day of gains as the selling pressure around the common currency has eased after it found a bottom marginally above the 1.11 handle earlier last month. The negative pressure on the dollar rose after yesterday’s dovish comments from Bullard. The Fed official said that interest rate cut “may be warranted soon” given the rising risk to economic growth posed by global trade tensions as well as weak US inflation. Against this backdrop, traders rushed to sell the greenback as the central bank signaled it could change its stance on rates. Now, market participants are waiting for Powell’s testimony due later today. Should his tone come as more neutral, the dollar could switch into a recovery mode on signs of relief. Besides, the downside potential in the US currency could be limited by the persistent risk aversion. In this scenario, EURUSD may retreat from the current levels and get back below 1.1240.
by HelenRush
Oil market could collapse further In May, Brent lost over 10% and is now down nearly 20% from peaks, registered in late April. On Monday, prices extended the drop, touched $60.75 for the first time since February, and clings to the $61 handle. Risk aversion continues to dominate in the global markets, including oil. Further escalation in the US-China trade tensions and Trump’s aggressive stance towards Mexico make investors worry about the global economy and price in a possible recession as the situation in the global trade continues to deteriorate. In particular, there are now reports that Chinese regulators have launched an investigation into the US delivery company FedEx after receiving complaints from users. Besides, over the weekend, China issued a report that blamed the conflict on the Trump administration. Meanwhile, Trump threated to impose 5% tariffs on all imports from Mexico in response to migrant surge. So, as there are no signs of relief for investors on the trade front, Brent remains vulnerable to further losses despite the oversold signals in the charts. Should the selling pressure persist, futures could challenge the $60 psychological level in the near term.
OANDA:BCOUSD
by HelenRush
USDJPY threatens fresh lows amid risk aversion USDJPY extended losses below the 109.00 and registered four-month lows at 108.75 amid a widespread risk aversion in the global financial markets that traditionally fuels the safe-haven yen demand. The pair turned lower once it failed to challenge the 110.00 barrier earlier in the week. 10-year yields are down by 3.7 bps to 2.177%, while US equity futures are losing about 0.7%, with European stocks are also on the defensive. The risk sentiment deteriorated after Trump announced tariffs on all goods from Mexico, demanding the country curb illegal immigration into the US. This step triggered fresh concerns over the aggressive external policy by the US President. By the way, Mexico has already wowed to retaliate. So, the situation could get even worse down the road. Against this backdrop, despite some oversold signs in the short-term charts, USDJPY may fall further should the investor sentiment fail to improve any time soon. Technically, the pair needs to get back above the 109.00 handle in order to see a weaker selling pressure.
by HelenRush
Brent stays afloat on drop in US inventories After a brief dip to the $66.60 area, Brent trimmed losses and recovered to the $68 figure yesterday. On Thursday, the prices are clinging to this level but lack the impetus to stage a more sustainable rebound amid the ongoing trade war between the US and China, the two largest consumers of oil. The latest API report brought some relief to investors as the data showed US crude inventories fell by 5.3 million barrels in the week to May 24 to 474.4 million barrels, which was a much larger drop than the 900,000-barrel fall expected. The official data from the Energy Information Administration due later today. Brent also remains afloat as traders expect that OPEC+ group will extend production cuts, while the US sanctions against Iran and Venezuela add to supply concerns. All of this helps to partly offset the worries about the potential consequences from the US-China trade dispute. Technically, Brent now looks neutral in the daily charts, with the $68 level in focus. The barrel needs to confirm a break above this barrier in order to target the $70 threshold again.
OANDA:BCOUSD
by HelenRush
Buy dips on gold Despite the ongoing US-China trade tensions, gold failed to capitalize on its safe-haven status and challenge a strong technical resistance at $1,290 and slipped to $1,276 yesterday. On Wednesday, the bullion has recouped nearly all previous losses but the rebound looks unsustainable as the greenback continues to rise from multi-week lows. The recent dynamics in the precious metal shows it looks attractive for buying on the dips. The prices have formed at least a temporary bottom marginally below the $1,270 mark and may stay afloat as the bullion may yet attract buyers amid further escalation of the US-China trade tensions. China has hinted that it could limit exports of rare earth metals to counter US pressure, which could trigger an agressive reaction fromTrump. Technically, gold needs to overcome the $1,287 intermediate resistance so that to challenge the $1,290 level and to target the psychological $1,300 mark. Once above, the technical outlook for the metal will improve. As long as prices remain below this level, downside risks persist but they are looking limited at the same time.
TVC:GOLD
by HelenRush
EURUSD exposed to downside risks EURUSD remains under pressure for a second day in a row on Tuesday as the sentiment around the common currency remains fragile since the start of the week. The pair failed to settle above the 1.12 level once again and had to retreat to daily lows around 1.1175. Dollar sees a recovery against major rivals, which coupled with the EU-Italian budget woes turned the euro on the defensive. The European Commission is considering proposing a disciplinary procedure for Italy over its failure to rein in debt. By the way, Italy may incur a penalty of up to $4 billion. In turn, Italian Deputy Prime Minister Matteo Salvini indicated he’ll push back against EU demands when crafting his next budget. So the appeal of the common currency may decline further should the situation escalate further in the days to come. Another source of euro weakness is the market concerns over the ongoing US-China trade war. Besides, EU-US trade relations remain tense as well. Against this backdrop, EURUSD could target the 1.1150 support area and then focus on the 1.11 handle.
by HelenRush
USDJPY licks its wounds after a massive sell-off Last week, USDJPY fell decently from the 100-DMA around 110.70, but once again managed to hold above the key 109.00 support area. The pair was driven by safe-haven yen demand amid escalation in the US-China trade war coupled with the general dollar weakness. The greenback is making some bullish attempts on Monday, however, the upside potential looks limited as investors remain cautious after Trump said that the United States are not ready to make a deal with China. At the same time, the yen is supported by US President’s statement on a great progress in trade negotiations with Japan. Additionally, the general pressure on the dollar comes from rising expectations of a rate cut by the Fed. By the way, according to Fed Fund Futures, the probability for a cut in December is now over 70%. However, it’s too early to price in such a scenario as higher tariffs with China are feeding into inflation, which may prevent the central bank from cutting rates. In the short term, as risk sentiment improved slightly USDJPY may stage a recovery. If so, the pair needs to clear a 109.75 intermediate resistance on the way to 110.00. On the downside, the 109.00 level continues to serve as a key support.
by HelenRush
The U.S. dollar extend losses agains safe-haven currencies  The U.S. dollar came under strong selling pressure as poor macroeconomic data coupled with rising tensions between the U.S. and China took the gloss off the greenback in investors' eyes. The U.S. Dollar Index (DXY) collapsed below 98.00 amid growing concerns over the health of the American economy and the side effects of the US-Sino trade war on the global economy. The steady sell-off on the equity markets added weight to the bearish sentiments and send the greenback lower across the board. The new-home sales turned out worse than expected and registered the most significant month-on-month decline in 2019. The purchases of new single-family homes decreased by 6.9% in April, against the forecasted drop of 2.7%. It means that the housing market is losing momentum despite that a spring is traditionally considered a strong selling season.  The poor data renewed the fears that the U.S. economy might slip into a technical recession and reminded investors that the Federal Reserve might bring the key interest rates down to counter the economic weakness. Additionally, the US-China trade deal seems more like a distant dream than an achievable goal at this stage. The above-said factors contributed to the dollar's falling, especially against safe-haven currencies like Japanese Yen and Swiss Franc. However, the sell-off may be limited in the long-run as the worries about the state of the global economy and local weakness of the overseas markets are likely to overshadow the dollar-negative factors.
NASDAQ:DLTR
by HelenRush
Brexit chaos continues dragging pound down The British pound has been a big loser recently, which is hardly a surprise to anyone. The British Prime Minister Theresa May is still struggling to get her Brexit deal through the parliament, while the opposition increasingly calls for her to resign. The degree of political and economic uncertainty skyrocketing, making it virtually impossible for the corporates to plan for the future or even do business. The pound has been spiraling down for ten consecutive days and touched $1.2624, the lowest level of the year, on Wednesday. Despite a recovery from the recent lows, GBP/USD is still down 0.1% since Asia opening, changing hands at $1.2650. Against euro, sterling also lost 0.1% and dipped to 0.8816 euro per pound. The pound is likely to stay a bear's case as there is little evidence that the political deadlock in Britain will be resolved any time soon. May's new version of the deal faces fierce criticism from both parties, and it increasingly looks like the parliament will rebuff anything that comes from May. Scottish National party's Westminster leader Ian Blackford openly says that May's time is up, while the leader of the Labour party Jeremy Corbyn indicates his party would oppose the plan, despite the possibility of a new referendum if the parliament back the bill. Moreover, it seems that Mrs. May is ready to yield to the MPs pressure and resign. She will announce that she is leaving her post as soon as tomorrow, on May 24, after a meeting with Sir Graham Brady, chairman of the 1922 Committee, the Times reports citing her allies.
by HelenRush
Oil prices extended the decline Oil prices extended the decline on Wednesday and headed for the most prolonged sell-off period since the end of April amid growing concerns that the trade spat between the U.S. and China will slow down the global economic growth and hamper the oil demand. In a separate development, the American Petroleum Institute (API) published a weekly report on U.S. crude stockpiles that showed another increase by 2.4 million barrels last week. The report on inventories of the U.S. Department of Energy is due today. The experts forecast a decile of about 1.7 million barrels; however, if the data comes in line with the API report, we will have the fourth gain in crude oil inventories in five weeks. Brent Crude broke $71.00 and dropped to $70.70 during early Asian hours. WTI is hovering around $62.50, down 0.8% in Asia. On the supply side, oil facilities in Libya were sabotaged once again, while Nigeria's Forcados crude pipeline remains closed after a fire that occurred nearby. These unplanned outages, coupled with falling production in Venezuela, will tighten the supply structure; however, the market has already priced in all those developments. OPEC and its allies may extend the production curbs to fight the elevated levels of global inventories, but it is not all set yet as Russia may oppose the deal. While Russian budget benefits from the growing oil prices, the production cuts put the country's biggest industry under pressure and challenge the government with tough choices.
OANDA:BCOUSD
by HelenRush
Swiss Franc tumbles down on intervention fears #helenrush #capit The Swiss Franc has been nursing losses since late New York session on Monday as traders took SNB's intervention threats close to heart. The bearish momentum was prompted by intervention fears as the Swiss National Bank stands ready to step in if it deeds necessary to ensure the market stability, according to the recent comments of Thomas Moser, the alternate member of the Governing Board in the SNB. Speaking at a conference in Copenhagen on Monday, he made it clear that investors should not ignore intervention risks as the central bank would not hesitate to resort to this option if it felt that it was a necessary step. In recent four years, the SNB has used a negative deposit rate and intervention fears to discourage franc's buying. The Swiss currency has lost nearly 0.3% of its value against USD and touched $1.0119 during early Asian hours before retreating to $1.0111 by the time of writing. Against Euro, CHF retreated towards $1.1274. USD/CHF has lost over 0.4% in recent 30 days, though it is still 2.8% higher than at the beginning of the year. The policy-maker had to resort to intervention threats to stop CHF growth amid a flight to safety inspired by increased trade tensions between the US and China. Being regarded as a haven currency, the Swiss franc tends to grow when the market is jittery and risk-aversive.
by HelenRush
Aussie celebrates Morrison's victory with a massive rally The Australian Dollar snapped a five-days long sell-off on Monday after a surprise win for Scott Morrison in elections over the weekend. The country's ruling Liberal-National coalition headed Prime Minister Scott Morrison managed to stay at the helm in what is considered to be a miracle victory as Labor party had been widely expected to win. The shock produced by the election results is comparable to Brexit referendum outcome and Donald Trump's victory in 2016, no wonder that the market reacted strongly to the news. The Aussie started the week with a bullish gap and jumped as much as 1% to trade at $0.6925 at the time of writing. The change of power is often associated with a period of uncertainty, while the retention of the current government allows expecting stability and consistency of the economic policy. Moreover, the market bets on increased spending promised by the Liberal-National coalition during the election campaign. Though the amount of stimulus is smaller than that proposed by the opposition, it is sure to reinforce the economy that has been losing momentum recently. However, the AUD/USD stellar growth may prove to be temporary. The tensions between the US and China and growing expectations of the rate cut by the RBA are the headwinds that pushed the currency lower during the previous week, and they are likely to return to the fore as soon as once the first reaction to the election results is over.
by HelenRush
The Japanese yen enjoys trade war escalation  USDJPY made some bullish attempts early on Friday but faced rejection from one-week highs around the 110.00 figure and turned negative on the day after a brief relief yesterday. The pair retreated closer to mid-109.00s, where is received a short-term support in the form of the 100-hour moving average.  The yen’s safe-haven status if further underpinned by the lingering US-China trade tensions. The trade spat escalated further on Friday after China said that it is no longer interested in resuming trade talks with the US under the current threat to escalate tariffs.  The reports intensified concerns over a full-blown trade war between the world’s two largest economies. This in turn provided another lift to the Japanese currency which could go higher if the relations between Washington and Beijing continue to deteriorate. Technically, the pair needs to hold above the 109.30 area so that not to threaten the 109.00 level in the short term.
by HelenRush