Crude Oil, WTI, Bent, China, Yellen, US Dollar, US CPI, Bailey – Talking Points
- The crude oil price drifted lower with the US Dollar finding some strength
- China price pressures are easing, and the chance of a US recession is up for debate
- Speakers from the BoE, ECB and Fed might ignite markets today. Will WTI see volatility?
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Crude oil has slipped lower going into the Monday session after a stellar run higher last week. The WTI contract made a 5-week high of US$ 74 on the open of trade today before the weakness emerged.
Soft China numbers and the mere mention of a US recession might have undermined confidence in the growth outlook. The WTI futures contract has been trading under US$ 73.50 bbl while the Brent contract is near US$ 78 bbl.
China saw consumer and producer inflation gauges underwhelmed market expectations. Headline CPI year-on-year was 0.0% to the end of June against 0.2% anticipated and previously. Chinese PPI was -5.4% for the same period instead of the -5.0% estimated and -4.6% prior.
Treasury Secretary Janet Yellen described her visit to China as a step forward toward ‘surer footing’ in relations between the world’s two largest economies. It concluded over the weekend.
Before she left China, Ms Yellen also did an online interview with ‘Face the Nation’. When asked about the chance of a recession in the US, she said, “It’s not completely off the table.”
APAC equities have had a mixed day with the indices of India, China and Hong Kong in the green while the rest of the region is mostly slightly in the red. Futures are pointing to a soft start for the Wall Street cash session at the time of going to print.
The US Dollar has climbed today with the interest rate on Treasury bonds maintaining their lofty levels. The back end of the curve has seen the bigger moves, leading to a bear steepening of the yield curve.
The growth-linked Aussie and Kiwi Dollars have seen the largest falls so far while gold lost some of its shine with the stronger USD.
A key focus for markets this week will be US CPI on Wednesday followed by US PPI on Thursday. UK GDP will also be released on Thursday.
Today will see Bank of England Governor Andrew Bailey will be speaking at The Financial and Professional Service Dinner. There will also be a long line-up of Fed and ECB voting members crossing the wires.
The full economic calendar can be viewed here.
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WTI CRUDE OIL TECHNICAL ANALYSIS
The WTI contract continues to see range trading conditions despite running over 4.5% higher last week.
The price remains contained within 66.80 – 75.06 for more than 2 months. Zooming out, it has traded between 63.64 and 83.53 since last November.
With this in mind, previous highs and lows might provide resistance and support respectively.
On the downside, support may lie at the breakpoint of 72.72 or the prior lows of 67.03, 66.82, 66.80, 64.36, 63.64 or at the November 2021 low of 62.43.
On the topside, resistance could be at 75.06, 76.92 and 79.18 ahead of a cluster of breakpoints and prior peaks in the 82.50 – 83.50 area.
Chart created in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCarthyFX on Twitter