USD RETAINS BEARISH TENDENCIES

USD continued to weaken against a number of its counterparts yesterday, as worries about a possible rate cut by the Fed continued to dominate the currency’s direction. Fed’s Chair Powell yesterday stated that the bank will respond appropriately to trade pressure, hence dropping his line of the bank being patient. It would be indicative of the market having priced in a number of negative scenarios that the USD did not react substantially to Powell’s comments. Analysts tend to note that central banks around the globe, are adopting a dovish tone, which could be part of a pre-emptive strike, implying that the global economic outlook has worsened. Should the current uncertainty continue, we could see the USD weakening even further, yet we would not be surprised to see the market pricing in the news and the USD stabilising in the next days.

WTI remains rather stable, despite US inventories rise

WTI prices showed little reaction, despite the US API weekly inventories figure showing a rather unexpected injection to US oil reserves. Analysts tend to point out that the release was a quite bearish number for the oil market and should it be confirmed by today’s EIA inventories figure could weaken oil prices. It should be noted that oil prices dropped heavily over the past few days as worries about a global slowdown increased, while US production has reached record levels. OPEC on the other hand has been withholding production, yet the head of Rosneft, Igor Sechin, said Russia should pump at will, indicating tendencies to increase production levels. WTI prices maintained a sideways motion between the 52.70 (S1) support line and the 54.45 (R1) resistance line.

Other economic highlights, today and early tomorrow

Today during the European session we get UK’s services PMI for May and Eurozone’s PPI and retail sales growth rates, both for April. In the American session we get the US ADP National Employment figure for May, the ISM non-manufacturing PMI for May and the release of EIA’s weekly crude oil inventories figure. In tomorrow’s Asian session we get the Australian trade balance figure for April. As for speakers BoE’s Ramsden, Chicago fed President Charles Evans, Fed’s Richard Clarida, Atlanta Fed President Raphael Bostic, Fed’s Michelle Bowman and Boston Fed President Eric Rosengren speak.

WTI H4