Weekly Crude Oil Inventories & Fed Chair’s Testimony.

By Kenneth@Xtrade - on July 10, 2019

The AUD has been extending gains, perhaps in expectation of the Westpac Consumer Sentiment, and other subsequent reports like the Electronic Card Retail Sales may keep the currency supported especially with the Federal Reserve Chairman J. Powell due to testify on the Semi-annual Monetary Policy Report before the US Congress. The reports may shed some light on the intended strategies or overall game plan of the Feds, leading to a possible rate cut. Some Market participants opted to sell the rumor and may buy the fact.

Hence selloffs were observed amongst holders of the USD. Even the DXY, the primary gauge of the USD. vs. a basket, other majors were caught at 97.13 nose-down 0.37% with possible further downside at the time of print 13:50 GMT.

There were a lot of question marks driving trader’s reaction to perceived events. Thus trading trends maybe subjected to abrupt directional changes.   

Global Stocks:

Global stocks continued in a bearish state with exceptions noted in the Asian session and likely to impact the EU, although the general view is for depressed sideways trading. It would be prudent to look at each Future individually and access their driving factors.

  • USA30: The Dow was seen down trending 0.19% in a range between 26,819.0 heading to 26,689.0 Ahead of Powell’s testimony with the possibility for a turnaround post by the US open Market at which technical analysis place the 2nd resistance at 26.9640

Germany 30: The Futures were seen capped between 12,344.5 – 12,464.0 seen down 0.60% The outlook is that the DAX 30 is likely to trade within these support and resistance levels until Thursday.

  • UK100: The FTSE 100 was also caught down trending in the early hours of the EU open. Down 0.05% trading between 7,451.8 and 7,489.0. However, with the prices of Oil surging, the future may gather momentum at which rate the is likely going to be a swift climb up. With possible 2nd resistance levels at 7,500
  • Italy 40: Was amongst the earlier gainers trading up 0.76% at 12,376.2 between a range of 21,807.00- 22,012.50 further upside is possible to the 2nd resistance of 22,120

Commodities:

The commodities were attempting to tack on gains or trading sideways.

  • Oil:  WTI prices rose yesterday on a massive draw according to the API report on Tuesday’s weekly Oil stockpiles which came in with a drop of nearly 8.130 million barrels for the week. The EIA is expected to confirm the report with a draw in inventories levels. This will carry prices further up. Unless the US Energy Information Administration’s report disappoints market expectation then resistance levels may be capped below the $60bbl psychological threshold. At the time of print 13:55 GMT. Oil was found ranging between 59.22-59.30. Up 2.40%. further upside to the 2nd resistance level 55.70 is possible with further breakouts.
  • Gold: Ahead of the Fed’s testimony price were seen slipping. Down 0.23% at 1,397.25 in a range of 1,391.95 -1,400.20 These could be good entry points for some short profit-taking. The likelihood the Gold could rally passed the 1st resistance to the 2nd resistance of 1,415.00 is almost 70% probably by the US open.

FX Market: as mentioned earlier the USD was defiantly standing tall against a basket of major currencies during the EU session. However, as the US markets open depending on Mr. Powell’s revelation during his testimony before Congress, could change. Especially rate cuts are mentioned. By the time of print. The following was the outlook on our usual pairs:  

  • USD/JPY: Was up trending 0.07% at 108.92 in a range between 108.84-109.00. downward trajectory is expected with the 2nd support levels targeted around 108.39.
  • EUR/USD: The pair were seen losing steam yet knee-jerking perhaps a prelude to the uptrends to follow after Mr. Powell’s speech. Spotted at 1.1218 trades down between 1.1202 -1.1230 Do not be surprised to see the uptrends to 1.1270 during the US session.
  • GBP/USD: The GBP was also down trending to the greenback seen standing around 1.2470 down 0.04% between 1.2444-1.2495 after the Feds testimony to devalue the USD, the Pound could start pounding the USD. 2nd resistance for the day is noted around 1.2520.

The Cryptocurrencies.

The tokens seemed to attract attention during the Asian and EU session. As mentioned in the previous post the cryptocurrencies are been used by market participants as a hedging tool and even times as safe havens. It’s increasingly becoming a market phenomenon.in which trader and investors jump ship to the crypto whenever apprehension hits the market with lack of visibility.  BTC, ETH, XRP, and others were caught rallying against the USD. However, upside movement maybe capped as most of them trade near the 70 RSI resistance level.

Downside correction for the BTC/USD pair is inevitable. Noted at 13,034 up 5.44% after opening at 12,440.4 downside movement to 12,340.00 may be seen by the end of the day.

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