Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...
Morning brief for May 24
2019-11-11 • Updated
The USD strengthened in Tokyo morning against its major peers due to rising 10-year Treasury note yield climbing 3 basis points overnight. The news that Trump asked intelligence directors to deny any collusion between his election campaign and Russian entities is no longer fresh one. The US political wrangling has stopped pressuring the greenback. Investors are now turning their focus towards the FOMC meeting minutes which are due at 9 pm MT time. You should pay closer attention to the phrases mentioning the pace of interest rate increases and to discussions about how to wind down the Fed’s balance sheet. A June hike still looks like as a base case scenario with investors pricing it at 83.1%. If there are some doubts over further upsurge in inflation rates, the USD will be hurt.
The euro lost its momentum and nudged away from its recent high of 1.1268 that was hit the previous day following the solid PMIs releases from the euro area. The German Ifo business climate spiked to a new all-time high. Europe’s composite PMI reading was unchanged at 56.8 suggesting that there were some offsetting weaknesses in the releases of other EZ countries. Germany will release its consumer confidence reading at 9 am MT time; the ECB President Mario Draghi is due to speak at 3:45 p, at the First Conference on Financial Stability in Madrid. At the present moment, EUR/USD is trading at 1.1180. The odds for upsurge towards 1.3000 are not high, but the bullish phase in the pair is still intact.
The British pound recouped some of its losses obtained in the wake of the suicide bombing in Manchester. GBP/USD edged up a few points higher (to 1.2975). The current mild downward pressure may send GBP towards 1.2920. A hike above 1.3000 will allow us to target 1.3050. For the present moment, the technical outlook is neutral.
AUD/USD dropped to 0.7445 after the Moody’s announcement downgrading China’s sovereign rating to A1 from Aa3. China’s massive debt had been at the center of concerns among economists. The downgrade warns us about slowing economic growth in the People’s Republic of China. Additional pressure came following the disappointing release of the Australian construction work done data. Iron ore prices were also lower in China today.
USD/CAD was trading higher at 1.3535 from yesterday’s low at 1.3452. Today’s focus will be on the Bank of Canada’s official rate announcement. The central bank is unanimously expected to stand pat tonight, but with core CPI trending lower we expect the bank will remain its easing bias. The oil prices were under pressure yesterday weighed down by Trump’s plan to sell off some of the US crude oil stockpiles to generate revenue and balance the deferral budget. OPEC members will meet in Vienna on Thursday to discuss a further extension of the output cut agreement from just the first half of this year towards the first quarter of 2018. The main focus will on whether OPEC extends the period of their pledge to cut production by six or nine months. Kuwait’s oil minister said yesterday that there is no unanimous agreement among OPEC producers for a nine-month extension.
Bearish Scenario: Sales below 78.99 with TP1: 77.93, TP2: 77.45, and upon its breakout TP3: 76.56 and TP4: 75.70 Bullish Scenario: Purchases above 78.00 (wait for a pullback to this area) with TP1: 1679.00 (uncovered POC*), TP2: 79.33, and TP3: 79.66 intraday
Bearish Scenario: Sales below 80.00 with TP1: 79.34, TP2: 78.94, TP3: 78.55, and 78.00 Bullish Scenario: Buys above 78.00 (wait for a retracement to the zone) with TP: 79.34 TP2: 80.00, and TP3: 81.00
On Friday, the gold price (XAUUSD) retreated from a recent two-week high, facing selling pressure. This decline was driven by hawkish minutes from the FOMC meeting, indicating the Fed's reluctance to cut interest rates. Elevated US Treasury bond yields, supported by a "higher-for-longer" narrative, further weakened demand for gold...
Bearish Scenario: Selling below 22.65 with TP1: 22.34 (intraday) and TP2: 22.02 (swing). Bullish Scenario: Buying above 22.70 with TP1: 22.90.
Intraday and swing scenarios based on price action and volume profile.