Daily Market Comment – Crude oil powers higher, dollar quiet after ISM data

· Oil prices climb after OPEC signals nothing new

· Dollar quiet, equities surrender gains but remain elevated

· Loonie rides the oil wave, Turkish lira falls to new record lows

OPEC kicks the can down the road

Crude oil prices stormed higher yesterday to touch levels not seen since late 2018 after the world's most powerful oil cartel did not signal any further increases to its production levels beyond July, as some feared. The producers apparently didn't even discuss any future supply boost, postponing any decisions until the next meeting in early July.

At that point the OPEC+ alliance will have more clarity around the demand side of the equation, and more crucially, whether there's a breakthrough in the US-Iran nuclear negotiations that ultimately brings an overflow of lost supply back online.

Oil's fortunes now hang on diplomatic forces. If there is a deal with Iran, prices will likely suffer a deep correction but perhaps not a trend reversal. OPEC could help balance things out by slowing its own production increases to prevent Iranian barrels from flooding the market.

The Canadian dollar initially rode the crude oil wave higher, climbing to its best levels since 2015, before pulling back. The fundamental story for Canada is still bright, with a solid domestic economy, a central bank that's taking its foot off the gas, and beneficial spillovers from US federal spending. That said, the psychological zone of $1.20 has been a fortress for dollar/loonie lately.

Dollar and stocks drift sideways

In the broader market, it was a rather quiet session. The dollar couldn't capitalize on a stronger-than-expected ISM manufacturing report, as the details were mixed. On the bright side, new orders surged and inflationary pressures seem to have stabilized, albeit at an extreme level.

However, supply chain issues are still raging and employment fell as manufacturers report difficulty in finding staff. That's a bad sign for Friday's nonfarm payrolls report. It implies that many people aren't motivated to look for a job while they can claim generous unemployment benefits. Those benefits expire in September, at which point a swarm of workers could return.

The stock market didn't love the news either, with the S&P 500 erasing some early gains to close virtually unchanged as traders tempered their expectations for the upcoming jobs report. Of course, even a massive NFP disappointment wouldn't necessarily tank the market as it would imply more Fed liquidity for longer, which is a tremendously powerful force for equities.

Sterling tumbles, Erdogan sinks lira

The British pound came under pressure this week, amid some rumors that the government might delay the final stage of the reopening, in fear of the Indian covid variant spreading. A setback could hit the pound, but the pain will likely be short-lived. Any delay would simply reflect an abundance of caution from health authorities, which is ultimately positive from a risk-reward perspective. 

Finally, the Turkish lira hit a new record low today after President Erdogan said he asked the central bank's new governor for a rate cut. Turkey's inflation problem has escalated in recent months with the annual CPI rate exceeding 17% in April, so maintaining high interest rates is infinitely important. As long as the central bank's hands are tied by politics, it's difficult to see the bottom in the lira's multi-decade downtrend.

As for today, the economic calendar is low key. The spotlight will fall on some remarks by the Fed's Harker (16:00 GMT), Kashkari (18:00 GMT), and Bostic (19:25 GMT).


Technical Analysis – GBPUSD capped by 50-day SMA as rebound falters

Technical Analysis – US 500 index defends bullish direction; bias cautiously positive

Daily Market Comment – Dollar smiles after impressive jobs data reinforces Fed bets

Technical Analysis – EURUSD continues to trade within tight boundaries

免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。


本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。

我們運用 cookies 提供您最佳之網頁使用經驗。更改您的cookie 設定跟詳情。