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Easing geopolitical risks dump oil prices Brent crude plunged over 3% on Tuesday, with prices slipped back from $67 to the local lows below $64. Today, the futures are making shallow recovery attempts but the impetus is subdued and downside risks persist. The driver behind the sell-off was Trump who raised hopes of easing tensions with Iran and pointed to a potential progress with US - Iranian relations in the Middle East. Moreover, Secretary of State Mike Pompeo said Iranians were willing to negotiate their missile program. Against this backdrop, traders rushed to price out the geopolitical premium in the market, which resulted in a sharp retreat in oil prices. The additional downside pressure came from Trump’s threat of new tariffs on China, which rekindled fears about demand. Besides, the API revealed bleak inventory data which curbed expectations ahead of the official EIA data due later today. At this stage, Brent will hardly be able to stage a sustainable recovery as traders continue to fear further progress in relations between Washington and Tehran.
OANDA:BCOUSD
by HelenRush
Gold struggles to regain the bullish momentum Gold prices failed to extend the upside move yesterday and continue to struggle on Tuesday, with the bullion holds below the $1,420 area for a third day in a row. USD demand has picked up slightly after a negative start of the week, which caps the upside potential in prices. Markets are still focused on the upcoming rate cut by the Federal Reserve and expectations of easing monetary policy in the US help the precious metal to hold above $1,400. In this context, traders will closely monitor further incoming US economic data. Today, the US retail sales report could affect USD dynamics and thus push gold prices in either direction. Strong figures will ease concerns over a more aggressive easing and may give the additional lift to the greenback. In this scenario, the bullion will remain under the local pressure and could get closer to the $1,400 handle. On the upside, the yellow metal needs to see a decisive break above $1,420 in order to challenge last week’s highs around $1,427. In the short-term, risks are skewed to the downside.
TVC:GOLD
by HelenRush
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Oil market: oversupply concerns weigh Brent crude remains stuck between the 100- and 200-DMAs on Monday, with futures struggle to get back above the $67 handle after marginal gains late last week. The market remains in limbo against the backdrop of some contradictory factors. Some pressure comes amid reports that tropical storm Barry weakened to a “depression”, which means that there won’t be long-lasting disruptions in US energy infrastructure. So now, traders have to price out major decline in oil production in the US Gulf of Mexico. Also, oversupply concerns increased after the EIA and OPEC reports pointed to slower demand growth and further rise in non- OPEC production in 2020. Besides, fresh Chinese data revealed the slowest quarterly economic growth in at least 27 years. The report reinforced worries about demand in the world’s largest oil-consuming country. Against this backdrop, considering lack of news from Iran, Brent will likely remain under some pressure in the short term, while the potential bullish attempts will be limited. The immediate resistance comes around $67. A clear break above this barrier could partially ease the downside pressure.
TVC:UKOIL
by HelenRush
Oil struggles to regain upside impetusOil prices continue to attract sellers on bullish attempts. After a brief jump above $65, Brent finished below $64 on Monday. Today, the futures are trying to get back above this level but the impetus remains subdued, in part due to a stronger dollar. The US currency extends the ascent since the release of strong jobs data as traders now expect the Fed will deliver a modest rate cut later this month. On the geopolitical front, tensions between the US and Iran persist. Over the weekend, Iran announced it had begun enriching uranium past the previous limit of 3.67%. The level of enrichment then surpassed 4.5% on Monday. Trump has issued a warning to Iran after the country moved to increase uranium enrichment beyond the purity threshold. All this could lead to new sanctions against Tehran and fuel worries about supply disruptions. This in turn may support oil prices down the road. Technically, Brent needs to challenge the $64.50 area and target the $65 threshold once again so that the downside pressure to ease. In the short term, market will focus on stockpiles data from the US as well as signals from the Federal Reserve. The FOMC meeting minutes is due on Wednesday.
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by HelenRush
EURUSD shifts focus to Powell, FOMC minutes EURUSD has settled in a limited trading range after an aggressive sell-off on Friday, with strong US NFP employment data sent the greenback higher across the board. As a result, the euro broke down of its consolidative trading range and registered over two-week lows marginally above 1.12. Despite spectacular employment data, Fed Fund futures continue to reflect a 100% probability for a 25bp rate cut later this month, which should cap the local downside pressure on the common currency. In this context, the upcoming Fed Chair Powell’s testimony and the release of the FOMC monetary policy meeting minutes will be in focus this week. Should the central bank confirm its dovish shift, citing economic risks and the lingering US-China trade tensions, the pair could gain amid a broad-based dollar weakness. Technically, EURUSD stays below the key hourly moving averages, which is a short-term bearish sign. In the daily charts, the pair needs to get back above the 100-DMA around 1.1260 in order to target the 1.13 barrier once again. A break below the 1.12 support will lead to increasing selling pressure on the pair.
by HelenRush
Gold remains steady Gold prices have partially retreated from long-term highs but remain steady in general, as a number of factors are driving flows into the precious metal. The bullion is trading marginally lower for a third day in a row, staying above $1,400 after a major one-day rally earlier this week. The yellow metal registered six-year highs ten days ago, with the prices are rising for a seventh week in a row. The steady recovery from lows below $1,270 may continue at least in the near term as risk sentiment remains unstable. Despite the US and China agreed to resume trade talks, investors doubt that the two countries will be able to strike a deal any time soon. Besides, tensions between the US and Iran persist. Also, gold is getting more attractive to investors amid expectations of a more dovish approach to monetary policy by global central banks. In this context, the US NFP employment report due later today will be important both for the greenback and gold prices. Disappointing figures could put the USD under pressure and drive the bullion higher. But considering extremely weak results for May, there could be a decent recovery in employment, which could trigger some profit-taking with the initial target at $1,407.
TVC:GOLD
by HelenRush
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The yen could gain further USDJPY has been trading mostly on the defensive this week, with the dollar struggles to regain the upside momentum as risk sentiment remains unstable amid the contradictory signals. The pair registered one-week lows around 107.50 yesterday and remains below 108.00 in a muted trading on Thursday. The Japanese yen derives support from lingering worries about the slowing global growth despite the major central banks have softened their tone, signaling their readiness to prop up the economy. Also, the declining US Treasury yields, the threat of fresh US tariffs on European goods, as well as doubts in the US-Chinese trade settlement add to the appeal of the safe-haven yen. Moreover, the downside pressure on the pair could intensify by the end of the week should tomorrow’s US jobs report disappoint. Weak numbers will inevitably fuel expectations of a rate cut by the Fed, which will hurt the greenback across the board. In this scenario, USDJPY will extend the slide with the initial target at 107.00 after derailing the 107.50 support.
by HelenRush
Gold shows resilience Gold prices resumed the rally after a short period of a bearish correction. The bullion showed resilience despite heightened volatility, as the retreat was limited by the $1,380 area, where the metal has attracted demand and got back to six-year highs. The recent events surrounding the G20 summit and resuming the dialog between the US and China fueled risk appetite, which made the safe-haven gold give up some gains. But despite the overbought conditions, the precious metal managed to recover above the $1,400 psychological level. On Wednesday, the rally has stalled just shy of recent long-term highs around $1,439. AS investor optimism over the US-China trade truce continues to wane, gold prices could at least stay elevated in the short term, especially considering the persistent Trump’s protectionist policy as the US President threatens new tariffs on EU goods. Against this backdrop, the yellow metal will likely remain bullish in general, though there is a risk of a correction in the near term as gold looks attractive for profit-taking at current levels.
TVC:GOLD
by HelenRush
Oil prices struggle to regain positive momentum Crude oil prices failed to stage a sustainable rally on Monday as Brent attracted an aggressive profit-taking above $66.50 and now tries to cling to the $65 level as traders continue to express concerns over the slowing global growth after disappointing manufacturing PMIs in major countries. Market participants were not inspired by OPEC decision to extend the deal by nine months, in part due to the fact that prolongation was mainly prices in already. Meanwhile, further signs of slowing global growth are fueling fears of weakening global demand for oil. The additional bearish pressure comes from the US, where shale oil producers continue to expand their activity. Technically, Brent needs to hold above $65 in order to avoid another retreat to $64.60 and then $64.20 on the way to $64. On the upside, the immediate resistance comes around $66. Once above this barrier, the short-term downside risks will partially abate.
TVC:UKOIL
by HelenRush
EURUSD gives up previous gains EURUSD pair resumed the downside move after finishing the week unchanged on Friday. The pair slipped through the 200-DMA and registered ten-day lows marginally above the 1.13 handle which represents the immediate support now. The euro is under pressure due to a widespread dollar demand after Trump and Xi agreed to resume trade talks. Cease-fire in the US-China trade war means less risks for the economy and thus a lower probability of aggressive rate cuts by the Federal Reserve. By the way, Fed funds futures now point to roughly 15% odds of a 50 bps rate cut in July, which is down from 25% prior to the Trump-Xi meeting. Against this backdrop, the common currency will likely remain under the selling pressure in the short term but the downside potential looks limited as markets continue to expect a rate cut in the US, while some doubts in a substantial progress towards a deal between the US and China will cap the dollar’s positive performance. Technically, EURUSD needs to hold above 1.13 and get back above the 200-DMA to trim intraday losses.
by HelenRush
EURUSD awaits the summit and economic data After some intraday fluctuations, EURUSD was little changed in the end of the day on Thursday. Bullish attempts continue to attract sellers, which prevents the euro from breaking the 1.14 barrier. On the other hand, the pair remains above the 200-DMA, which is a positive technical signal, at least in the short term. Market attention now shifts to the G20 summit in Japan, where the key point of focus will be meeting between US President Donald Trump and his counterpart Xi Jinping. The contradictory comments from this front make investors doubt in any progress between the two world’s largest economies. But the two leaders could at least lay the groundwork for resuming the trade talks, which could be positive for riskier assets including the euro. Traders will also eye the US data including producer price index, personal income and spending, Michigan consumer confidence index. The pair will also react to the upcoming euro zone CPI report. Should the figures from the US disappoint, EURUSD could challenge the 1.14 handle once again but news from the summit will be in market focus.
by HelenRush
USDJPY extends recovery from lows USDJPY is gaining bullish traction for the second consecutive session on Thursday, extending the recovery from multi-month lows registered below 107.00 last week. The yen’s safe-haven appeal turned sour amid optimism over the widely expected trade talks between the US and China this weekend. The greenback regained positive momentum ahead of the final US Q1 report due later today. Traders hope that the data will come on the strong side and thus will reduce the possibility of a rate hike by the Federal Reserve. The additional downside pressure on the yen came from the Bank of Japan as Wakatabe said the central bank won’t hesitate to add stimulus if momentum towards price goal is lost. In a wider picture, however, USDJPY remains under pressure and could resume the downside move should risk aversion resume in the short term. Technically, the pair needs to have a clear break above the 108.15 resistance in order to target 108.30 and then 108.50. On the downside, the immediate support comes as 107.60.
by HelenRush
Oil prices extend gains ahead of G20 summit Brent crude refreshed June highs around $65.43 on Wednesday and tries to settle above the $65 handle as the G20 summit looms. Risk sentiment has deteriorated somehow after comments from Fed’s Powell and Bullard were not as dovish as expected. But this is overshadowed by lingering tensions between the US and Iran, fueling concerns over possible supply disruptions. The market derives additional support from the API data. The report showed crude oil inventories in the US declined by 7.5 million barrels last week, while traders expected a draw by 2.5 million. Should the official EIA data confirm positive numbers, the futures could cement positions above the mentioned psychological level. In a wider picture, oil bulls hope for a positive outcome of the upcoming G20 summit, where US President Trump is scheduled to meet with China President Xi Jinping. Also, traders will expect comments from Russian President Vladimir Putin and Saudi Arabia Crown Prince Mohammad bin Salman on the sidelines of the summit. Their statements on OPEC+ deal could have a strong impact on crude prices.
TVC:UKOIL
by HelenRush
EURUSD rally may accelerate further The EURUSD pair extends the ascent on Tuesday, hovering around fresh three-month highs above the 1.14 handle. The euro is rising for a fifth day in a row, with the main bullish driver is a broad-based weakness in the greenback. Despite the pair starts to show some overbought conditions, the common currency could refresh local highs in the short term as Powell could confirm its dovish tone in today’s statement. In this case, traders will continue to price in a rate cut by the Federal Reserve and to exit USD longs, accumulated earlier. Besides, the additional upside pressure on the single currency may come from potentially weak US data including consumer confidence. If so, EURUSD will target 1.1425. But another bullish breakthrough will only be confirmed on a daily close above 1.14. Anyway, both fundamental and technical picture continues to point at euro strength, at least in the short term.
by HelenRush
Gold prices cling to six-year highs Gold prices extend the rally on Monday, with the bullion is trying to get back above the $1,400 psychological level, clinging to six-year highs registered at the end of last week. This is the fifth day of gains in a row as demand for the precious metal remains robust due to rising tensions between the US and Iran, a dovish shift by major central banks, and a widespread weakness in the greenback. During the weekend, Trump announced fresh sanctions against Tehran and said he was not seeking war with Iran after a senior Iranian military official warned any conflict in the Gulf region could spread uncontrollably and threaten the lives of US troops. Should Washington impose additional sanctions, tensions could rise further, which will boost the safe-haven demand for gold. On the other hand, there is a risk for gold from the upcoming G20 summit in Japan. The US and China leaders are expected to meet on the sidelines of the summit and any positive news from this front may fuel risk-on sentiment and thus decrease the appeal of the bullion later this week. Besides, there are some signs that prices are entering the overbought conditions, which could add to the potential downside pressure. Should a bearish correction take place, the immediate meaningful support comes at $1,380.
TVC:GOLD
by HelenRush
Oil follows the sentiment the stock markets Brent has refreshed June highs early around $64.30 early on Friday but failed to extend gains and got back below the $64 handle, clinging to the opening levels. In the weekly charts, the futures remain in the positive territory, largely due to yesterday’s rally amid euphoria in the financial markets. Today, the risk sentiment shows signs of abating after the aggressive rally. Weak Japanese manufacturing PMI fueled fresh concerns over global growth and capped the bullish attempts in the riskier assets including oil market. The PMI dropped further below the 50.0 threshold, to 49.5 from 49.8, while new orders were at the lowest level in three years. On the other hand, the market is still supported by geopolitical developments in the Middle East and softer stance on monetary policy by major central banks. A widespread downside pressure on the greenback also plays into Brent’s hands now. At this stage, the $64 level is in focus. A daily and weekly close above this barrier will brighten the short-term technical outlook. The immediate support now comes around $63.20 and then at $63.
OANDA:BCOUSD
by HelenRush
After FOMC, focus turns to Bank of England After the Fed confirmed its dovish shift yesterday, the Bank of England has a so-called Super Thursday today. The pound is rising for a third day in a row, challenging the 1.27 level ahead of the key event. The main driver behind the bullish tone in the pair is dollar weakness due to a softer Federal Reserve rhetoric and better risk sentiment amid positive signals from the US-China trade front. The Bank of England is widely expected to keep interest rates on hold. At the same time, despite the lingering uncertainty over Brexit, the central bank could indicate a possible increase later this year, citing wages that are growing at the fastest pace in a decade and inflation expectations that have risen substantially. On the other hand, after dovishness from Draghi and Powell, Carney will hardly express a clear hawkish tone amid a threat of a global recession. Nevertheless, GBPUSD could extend gains after the meeting in contrast to the obviously softer tone from the two other major central banks. As such, the cable may rise to the 1.2765 area, a break of which will open the way to 1.28. The uncertainty around Brexit could cap the pair’s bullishness.
by HelenRush
All eyes on FOMC Today the two-day Federal Reserve policy meeting concludes. The central bank’s tone will set the direction for the dollar across the board. In the light of recent weakness in economic data from the US and a softer rhetoric from the Fed officials, traders expect the policymakers to adopt a dovish stance and confirm an easing bias in the second half of the year. According to Fed fund futures, there is a 23% chance that the rates will be cut at today’s meeting, while expectations of a cut in July come at 83%. The central bank will likely decide to buy time and refrain from easing today, so the degree of dovishness of the statement and the number of cuts in the dot plot will determine how far the greenback could decline. Be the way, the US currency may enjoy a rally should the FOMC tone come less dovish than expected. In this case, riskier assets will come under pressure after the recent rally on renewed hopes for resuming US-China trade negotiations, as Trump tweeted overnight of his plans to hold an “extended meeting” with Chinese President Xi Jinping later this month.
FWB:FOMC
by HelenRush
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