Oil

Oil continues to fall, now down more than 4% on the day

WTI crude falls below $105

It’s not looking good for oil today, as the price is dropping. There is no single cause, but a combination of factors, including profit-taking, may be a plausible explanation for the latest drop since crossing $120 earlier this month.

This is bringing some key technical levels into focus.

There has been a notable retreat since the most recent jump above $120 earlier this month, but we are now seeing price hit key technical levels, which may cause a bit more of a stir.

Stocks

As selling pressure persists, European stocks look to March lows. It’s been a rough day for equities so far in European morning trade.

European equities are down heavily across the board, and key indices are now trading at their lowest levels since March.

The DAX is down 2.3 percent, the CAC 40 is down 1.9 percent, and the FTSE MIB is down 2.3 percent, all of which point to a potential drop towards their respective March lows.

The losses aren’t limited to European indices; US futures are also having a rough day so far.

The S&P 500 gained 90 points in trading yesterday, but futures are predicting a 70-point drop, or 1.9 percent, today.

For the time being, higher and more persistent inflation, central bank tightening, and a deteriorating economic outlook continue to pose a significant challenge to the market landscape.

USD/JPY

• USD/JPY falls back below 136.00 as Treasury yields fall
• Today’s risk-off mood is putting a bid in the yen
• The pair is making new lows on the day, falling to 135.83 in European morning trade This comes as Treasury yields continue to fall, with 2-year yields falling 9 basis points to 3.106 percent and 10-year yields falling 9 basis points to 3.210 percent.
• The drop in USD/JPY does not detract from yesterday’s breakout move, but if sellers can push past the previously broken high in June of 135.59, we may see a drop back towards 135.00.
• Another technical breakout towards 140.00 appears likely, but the bond market must play ball. However, if markets are solely focused on the deteriorating risk mood and bonds are also bid, the yen will be in a better position.
• For the time being, buyers still have the upper hand, but if we see a further retreat to the technical levels mentioned above, it is possible that yesterday’s breakout was a ruse.

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