USD Stabilises, For Now

Jun 30 21, 11:46 GMT

The greenback tended to remain rather stable against a number of its counterparts yesterday and despite enjoying some safe haven inflows due to the spreading of the Delta variant of the pandemic, market focus turns to the employment data due out this week. The releases start later today and could start predisposing the markets as for the rates and figures of US Employment report due out on Friday. Should there be signs of the labour market tightening and its recovery being expedited ,that could add pressure on the Fed to act and move its first post pandemic rate hike date even sooner or start tapering its QE program and vice versa. At the same time, it should be noted that gold prices are dropping while US Stockmarkets are sending out mixed signals.

The USD Index rose during the European session yesterday and stabilised later on, remaining between the 91.75 (S1) and the 92.30 (R1) levels. We tend to maintain a bias for a sideways motion currently and intend to keep it as long as the index’s price action remains between the prementioned levels. It should be noted though that the RSI indicator below our 4-hour chart, remains above the reading of 50, which may imply a slight advantage for the bulls. Should the index find fresh buying orders along its path, we may see it breaking the 92.30 (R1) resistance line and aim for the 92.75 (R2) level. If a selling interest is displayed by the market, we may see the index breaking the 91.75 (S1) support line and aim for the 91.30 (S2) level.

Oil regains some ground

WTI prices on Tuesday were on the rise recovering some of Monday’s lost ground after the API weekly crude oil inventories showed a drawdown of -8.153 million barrels, far wider than what was expected cancelling market worries about the demand outlook due to the resurgence of Covid cases. Market attention now turns to the OPEC plus group which are to meet tomorrow and media note the possibility of the oil producing block to discuss and possibly even lift further oil production curbs which are currently in place. Some analysts suggest a possible boost of output by more than 1 million barrels per day (bpd) and if so, that could weigh on oil prices as supply is to become more affluent, for the time being though we expect traders to keep an eye out for today release of the weekly EIA crude oil inventories figure.

WTI’s price rose yesterday yet fell short of breaking the 73.40 (R1) resistance line. We tend to maintain a bias for a sideways movement of the commodity’s prices and we note that the RSI indicator below our 4-hour chart runs along the reading of 50 which may also imply a rather indecisive market. Should the bulls take over we may see WTI’s prices breaking the 73.40 (R1) resistance line and aim for the 74.95 (R2) resistance level. Should the bears take over, we may the commodity’s prices breaking the 71.40 (S1) support line and aim for the 69.80 (S2) support level.

Other economic highlights today and the following Asian session:

Today during the European session, we get UK’s GDP rates for Q1, France’s and the Eurozone’s preliminary HICP rates for June, Switzerland’s KOF indicator for June and Germany’s unemployment data for June. On the monetary front in the late European session BoE Chief economist Haldane and Atlanta Fed President Bostic are scheduled to speak. In the American session we get from the US the ADP national employment figure for June and from Canada the GDP rate for April as well as the producer prices for May, while oil traders may be more interested in the release of the US EIA crude oil inventories figure. During the Asian session we get Australia’s manufacturing PMI for June, Japan’s Tankan indexes for Q2, Australia’s trade data for May and China’s Caixin manufacturing PMI for June.

USD Index H4 Chart