Crude Oil Futures: Extra weakness not ruled out

CME Group’s flash data for crude oil futures markets noted traders reduced their open interest positions for the fourth consecutive session on Thursday, this time by around 5.5K contracts. Volume followed suit and reversed two straight builds and shrank by around 184.3K contracts.

WTI could retest monthly lows near $76.00

Prices of the barrel of WTI charted and inconclusive session on Thursday. The move was on the back of declining open interest and volume and exposes some lack of direction in the very near term, while the resumption of the previous downtrend should not be ruled out. Against that, another visit to the September low at $76.28 (September 26) remains in the pipeline.

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Brent Oil: Below $83.00 next supports align at $77.50 and $73.00 – SocGen

On the first day of the last week of September, crude oil extended last week’s losses. Economists at Société Générale expect Brent to head towards $77.50, then $73.00 on a drop under $83.00.

An initial rebound is on the cards

“Daily MACD is anchored within negative territory which denotes steady downward momentum.”

“An initial bounce is not ruled out, however, $93.50 should provide resistance.”

“Brent is close to downside projections of $83.00. Next potential supports are at the lower band of a descending channel at $77.50 and $73.00.”

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Gold Price Forecast: XAU/USD plunges to new two-year-lows below $1640

 

• Gold price tanked to new two-and-half years low at $1638.90.
• Global S&P PMIs revealed in the EU, UK, and the US sparked investors’ recession fears, increasing appetite for the safe-haven US dollar.
• Gold Price Analysis: A break below $1638 to send XAU/USD towards $1600.
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Gold price slides to fresh two-and-half-year lows dampened by a risk-off mood and flows towards the US dollar, which rose to new two-decade highs. Overall, US dollar strength and higher US Treasury bond yields are two reasons for the fall in the precious metals complex, mainly the yellow metal. At the time of writing, XAU/USD is trading at $1643.50 a troy ounce.

US equities dropped as Wall Street closed with hefty losses between 1.62% and 1.80% on Friday. The US 10-year benchmark note rate retraced from yielding 3.829% and is set to end the week below the 3.70% threshold. On the same note, the US 10-year Treasury Inflation-Protected Securities (TIPS) bond yield weighed on the non-yielding metal, set to finish at 1.33%.

US Dollar Index looks bid above 107.00 ahead of PMIs

 

• The index posts decent gains beyond the 107.00 mark.
• US yields extend the decline across the curve on Friday.
• Flash Manufacturing/Services PMIs next on tap in the docket.

The greenback, in terms of the US Dollar Index (DXY), leaves behind Thursday’s pullback and regains the area beyond 107.00 the figure at the end of the week.

US Dollar Index now looks to data, FOMC

The index extends the erratic performance so far this week and advances north of the 107.00 yardstick, as market participants seen to have already digested the start of the hiking cycle by the ECB on Thursday.

Contrasting with the upbeat tone in the buck, yields in the US cash markets continue their march south and already navigate in multi-session lows across the curve ahead of the key FOMC event due on July 27.

In the NA session, the advanced Manufacturing and Services PMIs for the month of July will be the only releases of note later in the NA session.

What to look for around USD

The index looks side-lined in the 107.00 neighbourhood amidst a broad-based range bound theme so far this week.

In the meantime, the dollar remains underpinned by the Fed’s divergence vs. most of its G10 peers (especially the ECB) in combination with bouts of geopolitical effervescence and the re-emergence of the risk aversion among investors. On the flip side, market chatter of a potential US recession could temporarily undermine the uptrend trajectory of the dollar somewhat.

Key events in the US this week: Flash PMIs (Friday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Escalating geopolitical effervescence vs. Russia and China. Fed’s more aggressive rate path this year and 2023. US-China trade conflict. Future of Biden’s Build Back Better plan.

US Dollar Index relevant levels

Now, the index is up 0.49% at 107.12 and faces next contention at 106.38 (weekly low July 20) followed by 103.67 (weekly low June 27) and finally 103.41 (weekly low June 16). On the other hand, a break above 109.29 (2022 high July 15) would expose 109.77 (monthly high September 2002) and then 110.00 (round level).

Malaysia: Labour market remains solid – UOB

 

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest labour market report in the Malaysian economy.

Key Takeaways

“Malaysia’s labour market recovery continued to gain traction in May, supported by the full reopening of economic and social activities as well as country borders since Apr. Both the labour force participation rate and employment increased further to a fresh high of 69.5% and 15.90mn persons respectively (Apr: 69.4% and 15.85mn persons). This helped to keep the unemployment rate unchanged at 3.9% in May.”

“Record hiring was again propelled by the continuing recruitment in almost all economic sectors, expect for the mining & quarrying industry which recorded a decline in employment for the 22nd straight month. Services sector, which made up about 58% of the national GDP, remained the key driver of overall employment in Malaysia with wholesale & retail trade, information & communication, and food & beverage services sub-sectors taking the lead during the month.”

“Although the labour market showed persistent improvement, it is still unlikely to fully recover back to pre-pandemic levels at this juncture given multiple headwinds on the horizon. Worsening supply chain disruptions, elevated cost and consumer price pressures, as well as mounting fears of global recession may soon see more firms hitting the brakes on recruitment. We reiterate our year-end unemployment rate forecast of 3.6% for 2022 (BNM est: ~4.0%, end-2021: 4.2%, end-2019: 3.3%).”

Germany's Habeck: We want to prevent a domino effect in gas market

  

German Economy Minister Robert Habeck said on Tuesday that they will stick to their plan of prioritizing private households in case of a gas emergency, as reported by Reuters.

"The gas market situation is tense, cannot say whether more protection measures will be needed," Habeck added. "We want to prevent a domino effect in the gas market."

Market reaction

Safe-haven flows continue to dominate the financial markets following these remarks. As of writing, Germany's DAX 30 Index was down 1.5% on the day at 12,580.50 points.

GBP/USD consolidates gains near 1.2550, eyes on UK no-confidence vote

  

The market’s cautious sentiment could be witnessed via the S&P 500 Futures and the US 10-year Treasury yields as both of them struggle around 4,175 and 2.91% even if the Wall Street benchmarks rose the most in a week on Thursday.

Elsewhere, the Australia and New Zealand Banking Group (ANZ) highlights the difference between the currency BOE rate and the one per Taylor rule to suggest more work for the “Old Lady”. Further, a Tory critic, who is a UK Member of Parliament (MP), suggested rejoining the bloc and chatters over a no-confidence vote for UK Prime Minister (PM) Boris Johnson also weighed on the GBP/USD prices.

Looking forward, expectations of likely softer US data may keep GBP/USD buyers hopeful. That said, the headline US NFP is expected to ease to 325K versus 428K prior whereas the ISM Services PMI may retreat from 57.1 to 56.4. Other than the data, US President Joe Biden’s speech will also be important. However, a Platinum Jubilee Bank Holiday can restrict the pair’s moves on Friday.

📕 Comment on Gold on June 3, 2022:

 

📕 Comment on Gold on June 3, 2022:

 - In yesterday's session, precious metal Gold went right with the analysis trend when it bounced up from 1844 to 1870 ($26) and closed the day session with a bullish candle around 1868. The strength of the tree.  Yesterday's candle was the strongest in the past 9 sessions.  Therefore, in my opinion, the possibility of Gold will continue to increase in today's session.

 - Switch to the H4 time frame, the nearest support area for this precious metal is around 1863-1867.  Here we can refer to buying with a safe target below 1874 and above 1880.

📕 Comment on Gold on June 2, 2022:

 📕 Comment on Gold on June 2, 2022:

 - After the strong declines of the first 2 weeks of May, 2 weeks later, the precious metal Gold regained nearly half of the decline of the beginning of the month.  Closing the session in May Gold still closed with a bearish candle but retreated quite a lot and closed around 1836 (this is a strong support area) so my view in the first trading sessions of June  In this case, it is likely that Gold will still be prioritized for the uptrend.

 -In yesterday's trading session, after gold fell to 1828, it immediately bounced back to 1849. Closing the day session with a bullish candle right after the previous day ended with a falling tree.  My personal opinion in today's trading session is still prioritizing the option to increase.  The nearest support price zone for precious metal Gold 1835-1840.  If Gold has any slight correction here, we can establish a buy position with target 1855.-1860.

EUR/USD extends ECB-inspired rally to mid-1.0500s

 EUR/USD has extended its daily rally and reached its highest level in nearly a week above 1.0550. Hawkish comments from ECB policymaker Klaas Knot and the broad-based dollar weakness in the risk-positive environment continue to fuel the pair's upside as focus shifts to US data.

 The Relative Strength Index (RSI) indicator on the four-hour chart stays below 70 while holding above 50, suggesting that the pair has more room on the upside before turning technically overbought. 

On the upside, 1.0480 (50-period SMA, Fibonacci 50% retracement of the latest decline) aligns as initial resistance. In case this level turns into support, 1.0500 (psychological level, Fibonacci 61.8% retracement) and 1.0530 (100-period SMA) could be seen as the next recovery targets.

Supports are located at 1.0450 (Fibonacci 38.2% retracement), 1.0420 (Fibonacci 23.6% retracement) and 1.0400 (psychological level).

 Crude Oil Futures: Further downside looks unlikely

CME Group’s flash data for crude oil futures markets showed investors trimmed their open interest positions by around 3.4K contracts at the beginning of the week, adding to the previous daily drop. Volume, instead, increased for the fourth session in a row, now by around 160.2K contracts.

WTI: Next support comes at $100.30

Prices of the barrel of WTI dropped sharply on Monday against the backdrop of shrinking open interest. That said, extra losses appear out of favour in the very near term, while prices of the commodity remain well supported by the so far May low near the $100.00 mark per barrel.

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Crude Oil Futures: Rising bets for further upside

Open interest in crude oil futures markets went up for the third consecutive session on Thursday, now by nearly 19K contracts according to advance prints from CME Group. Volume followed suit and rose by 157.3K contracts, fading the previous day’s retracement.

WTI now targets April tops around $109.00

Prices of the WTI extended the weekly recovery on Thursday. The move was accompanied by rising open interest and volume, paving the way for the continuation of this bounce to, initially, the April high just above the $109.00 mark per barrel in the very near term.

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