Risk aversion ahead of Fed minutes as PMIs offer good and bad signals

We're seeing some more risk aversion on Wednesday ahead of the release of the June FOMC minutes, with PMI data throughout the day painting a slightly more gloomy picture for the economy.

Revisions in Europe were very modest, in the cases where we actually saw them, but they were to the downside and from already relatively depressed numbers. It's clear that they point to a deceleration in the all-important services sector but that isn't necessarily a bad thing if we ever want to see interest rates falling again.

Nor is it a bad thing that there appear to be signs of cost pressures slightly softening in the surveys which will be encouraging for central banks, albeit not nearly enough to tempt them into pausing just yet. But it could suggest we'll see more concrete signs of progress over the coming months.

The data from China was no more encouraging, with the Caixin services PMI falling quite markedly, further highlighting the challenging headwinds the economy is facing during its recovery from zero-Covid restrictions late last year.

Can Oil break above its two-month range after Saudi and Russian cuts?

Oil prices are higher again today but still remain within their two-month range. The rally has been aided by the cuts announced by Saudi Arabia and Russia this week but ultimately, another failure to break above the range will suggest traders have largely shrugged it off.

The previous high in Brent two weeks ago came just above $77 and a failure to hit that will represent yet another lower peak over the last month or so and may, therefore, merely confirm that we remain in a very gradual consolidation. We do appear to have seen a slight uptick in momentum over the last couple of days though so perhaps we're going to see a real test of the previous peak, a break of which could be quite bullish.

Gold pares gains ahead of the Fed minutes

Gold is marginally lower on the day after running into resistance around $1,930-$1,940. This was the first big test as part of the recovery we've seen over the last week and so far it's fallen short. We may see another run at it, early profit-taking may have just taken the wind out of the sails, although that in itself isn't a great sign.

It may well be that traders have an eye on the FOMC minutes as a potential catalyst that triggers a lot of volatility in the yellow metal so are taking a more defensive stance in anticipation. The jobs on Friday could be more influential though as the minutes are unlikely to tell us something game-changing, while a weak jobs report could signal a significant shift.