Crude oil, WTI, Brent, US Dollar, SNB, FOMC, Fed, RBA, AUD/USD – Talking Points
- Crude oil prices continue to languish as markets weigh risks
- Persistent concerns around the banking sector might play out further
- The Fed meeting on Wednesday is in focus. Will a hike sink WTI?
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Crude oil remains on the back foot today after visiting lows not seen since late 2021 as markets appraise the efforts of authorities to shore up confidence in the banking sector.
The WTI futures contract is near US$ 67 bbl while the Brent contract is a touch above US$ 73 bbl.
At the same time that the Swiss National Bank orchestrated the Credit Suisse – UBS deal, US authorities are weighing up the possibility of all deposits with banks being guaranteed. Currently, the Federal Deposit Insurance Commission (FDIC) covers deposits with recognised institutions up to US$ 250,000.
While concerns continue to permeate market perceptions of balance sheet vulnerability among small and regional banks, the Federal Open Market Committee (FOMC) meeting on Wednesday moves into sharp focus.
Interest rate markets are tilting toward a 25 basis point hike but the pricing isn’t entirely complicit with around a 70% probability priced in.
Wall Street finished its cash session in the green with hopes of a less hawkish Fed providing some relief and futures are indicating a potential flat start to their trading day at the time of going to print.
APAC equities kept the buoyant mood going with all the major indices moving higher, although Japan was closed today for an equinox holiday. Treasury yields have barely moved in the Asian session with Japan away.
Currency markets have been fairly quiet so far today, with the exception of a dip in the Aussie Dollar. It softened after the Reserve Bank of Australia (RBA) meeting minutes revealed a shift toward a pause in its rate hike cycle. They have lifted rates ten times since May last year. The Kiwi also
After trading above US$ 2,000 yesterday for the first time since April last year, the gold price has steadied today at around US$ 1,980.
After Germany’s ZEW survey, Canadian CPI will be closely watched.
The full economic calendar can be viewed here.
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WTI CRUDE OIL TECHNICAL ANALYSIS
In the days prior to the collapse of SVB Financial, WTI had broken below all daily simple moving averages (SMA).
A bearish triple moving average (TMA) formation requires the price to be below the short term SMA, the latter to be below the medium term SMA and the medium term SMA to be below the long term SMA. All SMAs also need to have a negative gradient.
In the days following the SVB collapse, the criteria for a TMA were met. If these conditions prevail, bearish momentum might linger. A break above any SMA could suggest an end to this momentum.
Support may lie at the prior lows of 64.36, 62.43, 61.74 and 61.56. On the topside, nearby resistance might be at the recent peak of 69.83, just ahead of the breakpoint of 70.08.
Chart created in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCathyFX on Twitter
