2020-07-24 • Updated
The pair sharply dropped to the one-month low. Will it keep falling further?
The US dollar is trading at its lowest levels since March 9. It seems that all the fundamentals are against the greenback these days. The risk-on sentiment pushed it deep down for three days. Moreover, investors have fears that republicans and democrats won’t be able to agree on the US fiscal stimulus package in a short time. At the same time, US unemployment claims, the CB leading index and existing home sales came worse than analysts expected and weighed more on the US dollar.
Today the market sentiment switched to risk-off. Investors picked up the Japanese yen choosing between two safe-have currencies. Concerns over rising Covid-19 cases in the USA pushed the USD down. While US-China tensions are escalating, Japan remains resilient to the external economic shocks. As long as the USD is weak, the JPY will keep rallying.
USD/JPY has been trading in a range between 107.40 and 106.75 for more than two weeks. Finally, it escaped it. As a rule, it should fall by the same height as the range itself. Thus, we may assume it would soon reach the support at the key psychological mark at 106.00. The move below this level will open doors towards the next support at the low of March 6 at 105.25. On the flip side, if the pair breaks through the resistance at the high of June 24 at 106.57, it may surge higher to the bottom of the horizontal range at 106.75 and then to the intersection of 100- and 200-day moving averages at 107.20.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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