Markets remain volatile as USD retreats and oil swings persist

Markets remain volatile as the USD retreats in the FX market, while shifting central bank expectations, oil price uncertainty, and geopolitical developments continue to drive cautious sentiment across global financial markets.

USD retreats in the FX market

利 USD was on the retreat in the FX market yesterday as its various central banks outside the US seem to be laying the groundwork for a tightening of their monetary policy.

The possibility of stronger inflationary pressures given the rise of oil prices, is forcing central banks to act.

We note especially the recent interest rate decisions of the ECB, BoE, BoJ and RBA, all implying a possibly faster pace of monetary policy tightening than the Fed which is expected to keep rates unchanged.

US equities maintain a wait-and-see position

US stock markets tended to stabilise somewhat yesterday. We note on a fundamental level though, that hawkish market expectations for the Fed’s intentions tend to weigh.

Also the high volatility in oil prices and the developments in the war in Iran tend to provide headwinds for US stock markets.

Overall, we may see US equity markets maintaining a wait-and-see position in expectations of further developments on the prementioned issues.

Oil prices remain volatile

Oil prices remain volatile as efforts are being made to secure the passage of oil tankers through the Straits of Hormuz.

European nations and Japan seem ready to contribute to the safe passage through the Strait. Furthermore the US seems ready to lift sanctions on Iranian oil allready loaded on tankers.

All mentioned could provide tailwinds for the supply of oil and thus weigh on oil prices. Yet the oil market seems to doubt and remain skeptical for any positive developments at the current stage.

Gold’s price tumbles

Gold’s price continued to tumble lower yesterday in the Asian and early European session.

The prospect of a tighter monetary policy by the Fed and the strengthening of the USD tended to weigh on the precious metal’s price. Yet as the USD started to lose ground in the FX market in the early American session, gold’s price corrected and tended to stabilise.

本日のその他の注目点

Today we get Germany’s PPI rates for February and Euro Zone’s Current Account balance for January, the UK’s CBI trends for industrial orders for March and from Canada February’s PPI rates and retail sales for January.

Charts to keep an eye out

GBP/USD

USD/CAD continued to edge higher yesterday and during today’s Asian session, breaking the 1.3720 (S1) resistance line now turned to support. Given also that the RSI indicator has risen from the reading of 50, implying a bullish market predisposition for the pair, we expect the upward movement to continue.

Should the bulls maintain control as expected, we may see USD/CAD starting to aim for the 1.3880 (R1) resistance line. Should the bears take over, we may see the pair dipping once again below the 1.3720 (S1) support line and starting to aim for the 1.3550 (S2) support level.

WTI

WTI’s price dropped yesterday testing the 92.25 (S1) support line, yet failing to break it. Please note that in order to provide a clearer picture we recalibrated the support and resistance lines in our chart.

Given that the commodity’s price action has broken the upward trendline guiding it we temporarily switch our bullish outlook in favour of a sideways motion bias between the S1 and the R1. Yet given that the RSI indicator is still at high levels we issue warning for a possible renewal of the bullish tendencies for WTIs’ price.

Should the bulls renew their dominance we may see WTI’s price breaching the 100.90 (R1) resistance line and start aiming for the 107.00 (R2) resistance barrier.

Should the bears take over, we may see WTI’s price breaking the 92.25 (S1) support line and continuing lower to reach if not breach also the 87.10 (S2) support level.