In this article, we have covered the highlights of global market news about the Oil prices, EUR/USD, US Dollar, Dow Jones and S&P 500.
Oil prices recover from their Tuesday low as supply issues resurface.
Oil prices increased by as much as over 3% on Wednesday before reversing some of their gains as speculators flooded the market after a severe sell-off the previous day. Supply issues are once again at the forefront, despite persistent fears about a worldwide recession.
After falling 9.5 percent on Tuesday, the worst daily decline since March, Brent oil futures climbed as high as $3.08, or 2.9 percent, to $105.85 a barrel in early trading. At 0650 GMT, it was recently up $1.63, or 1.6 percent, at $104.40 a barrel.
After dropping below $100 for the first time since late April, U.S. West Texas Intermediate (WTI) crude recovered to a session high of $102.14 a barrel, up $2.64 or 2.7 percent. With the U.S. currency strengthening, it briefly dropped into the red before recovering and closing up $1.20, or 1.2 percent, at $100.70 a barrel.
The dollar reached multi-month highs versus other significant rivals and reached a 20-year high against the euro as investors fled to the safe-haven currency in response to increased recession worries stoked by rising gas costs and political unpredictability.
Oil often costs more in foreign currencies when the dollar is higher, which might reduce demand.
“In a way, today is a reset. Without a doubt, there is a shortage of cover, and bargain hunters are entering “the Again Capital LLC partner John Kilduff said.
“The main narrative surrounding the tightening of the world economy remains. Clearly, the sell-off was excessive “Added he.
While EUR/USD breaks lower, EUR/JPY poses a similar move threat.
As it traded at its lowest point since December 2002, the EUR/USD suddenly began to fall. The move disregarded the previous Double Bottom as the negative momentum seemed to have picked up.
All Simple Moving Averages (SMA), from shortest to longest tenor, are showing negative gradients and are sequentially arranged from the price. On June 29th, this indication started to become clear.
This region, between 1.0340 and 1.0360, may now act as resistance after breaching below three previous lows. The 10-, 21-, and 55-day SMAs further up may provide resistance. The latter is in accordance with a declining trendline that is at the moment being broken at 1.0566.
Retail Crowd Long Exposure Keeps Hinting to Decline in Dow Jones, S&P 500 Forecast
According to the IGCS measure, the Dow Jones is net-long by around 66 percent of retail traders. This suggests that prices may continue to decline given that the bulk of them are skewed to the positive. This is due to the fact that long bets have risen by 14.53 percent and 15.27 percent, respectively, from yesterday and last week. In light of this, current attitude and recent developments are resulting in a greater negative contrarian trade tendency.
Unsurprisingly, the price has fallen below the bottom band of the Bollinger Band, which is based on a 21-day simple moving average (SMA). A closing back within the band may signal a break in the negative trend.
The Bollinger Bands’ breadth has somewhat increased as historical volatility, which they quantify, has increased.
Amid the Ukraine War, the US Dollar to Rise on Fed Minutes and G20 Summit?
The next week may see a spike in the US dollar as a result of the Fed minutes and the crucial G20 conference. The former might spark a surge if it indicates that monetary authorities are more hawkish than market forecasts, boosting the Greenback’s growing yield advantage against equivalents in the G10 and developing markets.
The Dollar may also increase if a crucial G20 foreign secretaries conference takes place during the Ukraine War, which would put markets on edge and highlight the liquidity of the USD. The macroeconomic climate has benefited the dollar, increasing its attractiveness to risk-averse and yield-seeking investors both. This dynamic will probably be amplified this week.
Traders will closely watch the June Fed minutes. The last rate rise occurred in 1994. As borrowing costs rose, markets fell as the Fed prioritized managing “transitory” inflationary developments.
The central bank’s determination worries markets. When the economy slowed in 2018/2019 and marketed feared, the Fed halted hiking rates and reversed course. The stakes and situations are substantially greater today. Ultra-low interest rates have become the standard and new usual in recent years. Interest rates were at a 5,000-year low until recently. Markets are hooked to cheap credit. Rising rates seem insurmountable.
Investors are pricing in a 75-basis-point rate rise for July, so volatility is inevitable if the minutes indicate policymakers are more hawkish than expected. Equities may continue to fall, while the US Dollar may strengthen on demand for yield-advantaged liquid assets.
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