Sep 27, 2022 10:00 AM +05:00
VOT Research Desk
Crude Oil, US Dollar, British Pound, GBP/USD, BoE, USD/JPY, Gold,
MARKET CONSIDERATIONS
Crude oil prices took a breather from being battered today. The US Dollar eased after recent rampant rallies as markets take stock.
Crude oil is under pressure because perceptions of global growth going forward continue to be questioned, and interest rates have soared once more today.
Overnight, Loretta Mester, president of the Federal Reserve Bank of Cleveland, reiterated the mantra “higher for longer rates,” which resulted in an increase in yields across the curve.
Today, the yield on the 10-year Treasury is at its highest level since 2010, reaching 3.93 percent. The yield on bonds is higher and the price is lower across all developed markets.
The WTI futures contract is close to US$ 77 bbl due to the tightening of economic conditions, while the Brent contract is just below US$ 85 bbl.
Through the Asian session today, the USD has been a little weaker, but it is still generally higher than where it started the week against most currencies and other risk assets. Most notably, GBP/USD continues to struggle for momentum.
Market concerns regarding the viability of the UK government’s new fiscal policy, which was revealed on Friday, have not been significantly alleviated by the Bank of England (BoE) statement of yesterday.
An unconventional strategy for governing a nation’s economy would appear to be fiscal loosening concurrently with monetary tightening- As the markets question the logic of this strategy, sterling and gilts have been severely affected.
Despite the Bank of Japan (BoJ) announcing an unexpected round of bond purchases, the USD/JPY continues to trend toward 145.The BoJ will closely monitor a move above 145 for a second round of physical FX intervention. RBNZ Governor Adrian Orr said, “the tightening cycle is very mature,” suggesting that rate increases may be tapering off. Today, Kiwi is slightly higher against the softer US Dollar.
Going into the European session, gold is slightly firmer, hovering above US$ 1,630.Futures are pricing in a slightly positive start to the US cash session, and APAC shares were fairly stable today.
Today, a number of speakers from the Fed, BoE, and European Central Bank are on the air.Huw Pill, the BoE’s Chief Economist, and Jerome Powell, the Fed Chair, will be notable.
Analytics
WTI crude oil has returned to January levels, reversing the effects of the Ukraine war.
With a number of simple moving averages (SMAs) above the price and exhibiting negative gradients, bearish momentum may be developing.
The historical breakpoint zone between 74.76 and 74.96 could serve as support.
The breakpoints of 81.20 and 81.90 could serve as resistance on the upper side.
