WTI Crude collapsed during trading last week following the unexpected statement from Saudi Arabia stating that any output deals would be dependent on Iran’s participation, which consequently crumbled expectations of a successful meeting in Doha. This paradox of a scenario comes at a time when Iran is engaged in a self-fulfilling quest to boost its output by 4 mbpd in a market already oversupplied by 2mbpd. The cocktail of events in Q1 almost make it seem like OPEC had no real intention in curbing output, but insteadexploited the explosive levels of volatility to generate speculative boosts in oil prices. Sentiment remains bearish towards WTI and with elevated concerns over the excessive oversupply haunting investor attraction, any recovery in prices may have been sabotaged.

Investors should keep in mind that the firm fundamentals of an unrelenting oversupply have been the driving force which has kept prices depressed while concerns that demand may be waning continues to empower the bears. The over-extended rally that took prices above $40 should provide a foundation for bearish investors to attack with targets pointing towards $35 and potentially lower. From a technical standpoint, WTI is bearish as there have been consistently lower lows and lower highs. Prices are trading below the daily 20 SMA and the breakdown below $38 has opened a path towards $35.

WTI

 

Dollar bears shrug NFP

Sentiment towards the US economy received a welcome boost during trading on Friday following the stable NFP figure of 215k which displayed signs of US labor market resilience in a period of diminishing global growth. Although this was the case, Dollar bears were unfazed which could have been the result of Janet Yellen’s dovish stance last week that faded any expectations of US rates being hiked anytime soon. Sentiment remains bearish towards the Dollar and the eroding expectations over the Fed raising US rates in Q2 could encourage sellers to attack the Dollar further. It must be understood that ongoing global woes that have exposed the US economy to major downside risks may dictate if the Fed respects its pledge to raise US rates twice this year.

The Dollar Index is bearish on the daily timeframe and with Dollar weakness potentially becoming a major theme in the currency markets; the index may be poised for further declines.From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support at 95.50 may transform into a dynamic resistance which could trigger a further decline towards 94.00.

Dollar Index

 

Sterling pressured ahead of construction PMI

The Sterling has been victim to an incessant selloff from the mounting Brexit fears while risk aversion continues to sour investor appetite towards the currency. Sentiment remains bearish towards the Sterling and more selloffs may be expected following the latest polls displaying 43% of people backing a Brexit. While the mounting uncertainty over the possible impacts of a Brexit to the UK economy is ensuringthat the pound remains depressed, domestic data which has pointed to further weakness in the UK economy simply provides the BoE a compelling reason to leave UK interest rates unchanged. Investors may direct their attention towards the UK Construction PMI today, and if this fails to hit expectations then the GBPUSD may be offered a clear path towards 1.4200.

The GBPUSD remains bearish and may decline further as the week progress if Sterling weakness intensifies. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A breakdown below 1.42 should open a path towards 1.40 and potentially lower.

GBPUSD

 

Commodity spotlight – Gold

Gold prices were placed on a roller coaster ride last week following the positive NFP report which offered the Dollar bulls a false line amid fading expectations of US rate hikes. The initial surge in Dollar strength sent Gold prices to weekly lows before the markets digested that the current NFP figure had a minimum impact on near term Fed rate hike decisions. Gold is still fundamentally bullish and should continue to appreciate as Dollar vulnerability becomes the main theme in the global markets. The lingering concerns over slowing global growth and ongoing China woes may provide a foundation for buyers to install another round of buying in the medium term. From a technical standpoint, a breakout above $1235 may open a path towards $1250. The $1200 support remains crucial for bulls to keep in control.

 

 


 

Disclaimer:This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD rises above 1.3300 after UK Retail Sales data

GBP/USD rises above 1.3300 after UK Retail Sales data

GBP/USD trades with a positive bias for the third straight day on Friday and hovers above the 1.3300 mark in the European morning on Friday. The data from the UK showed that Retail Sales rose at a stronger pace than expected in August, supporting Pound Sterling.

GBP/USD News
USD/JPY keeps BoJ-led losses below 142.50, Ueda's presser eyed

USD/JPY keeps BoJ-led losses below 142.50, Ueda's presser eyed

USD/JPY remains in the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold price is looking to build on the previous day’s rebound early Friday, consolidating weekly gains amid the overnight weakness in the US Dollar alongside the US Treasury bond yields. Traders now await the speeches from US Federal Reserve monetary policymakers for fresh hints on the central bank’s path forward on interest rates.

Gold News
Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu remains strong on Friday after breaking above a symmetrical triangle pattern on Thursday. This breakout signals bullish momentum, further bolstered by a rise in daily new transactions that suggests a potential rally in the coming days.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures