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Market Wrap
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London session closes with the FTSE 100 lower for the day and the GBPUSD also falling. The FTSE is still trading above the 7,000 level and within the tight range we have traded in for a couple of weeks now. Thursday’s highly anticipated May US inflation data will provide insight into how the central banks may react shortly, but this choppy trading is also down to worries over the rapid spread of the Delta coronavirus variant. The UK posted the highest daily COVID-19 cases today since last February, which if the trend continues will no doubt delay the full re-opening of the UK economy.
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The British pound did not find much love today at the start of the US session having made some gains in the first part of the London session. A stronger US dollar mixed with the lack of positive news from the UK has brought the pound down 60 pips, but the sentiment indicator on the ActivTrader platform still has the bull’s versus bears relatively even. Cable had driven higher on comments today from the Bank of England’s outgoing economist Haldane, who said many sound bites today that included, “wage increase may be needed to get people back to work”, “this is a dangerous time for monetary policy”, having previously said “we may have to start turning off the stimulus tap” and that he sees “dangerous inflation risk in the UK”.
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WTI crude rose during the London session to around $70.40 a barrel today, as expectations for strengthening demand grew ahead of the EIA stocks report. The US CDC has eased travel recommendations for more than 110 countries. The EIA report showed a bigger-than-expected drop of 5.241 million barrels in US crude inventories last week although gasoline stocks surged by 7.046 million, the largest increase since April 2020, which then led to the price of WTI to drop nearly 50 cents towards $69.50. Oil’s run-up from May’s swing low seems to be running out of steam having found resistance around the $70 level. Today’s data could point to weaker demand for gasoline and distillates, which will be a worry as OPEC+ are steadily increasing supply into the markets, and there was an increase in the EIA Crude Production figures too.
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The Nasdaq found support at yesterday’s value area high of 13840 and just above yesterday’s point of control at 13815.50. These key levels were too strong for the sellers to take any control after breaking out of the initial balance and the Nasdaq looks likely to test yesterday’s high. The share prices in Apple, Microsoft and Google are up 0.33%, 0.77% and 0.39% respectively and the VIX is trading around the 17 level.
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Tomorrow we get the highly anticipated US CPI figures which one would hope would bring some new trading ranges whether the figure is good or bad. Sideways markets tend to be the time most traders lose the most, so a good impulsive move out of these ranges could be explosive. The Bank of Canada kept monetary policy as per the previous month, with the interest rate at 0.25% and weekly purchases of bonds unchanged. As this was highly anticipated the USDCAD moved as the US dollar broadly appreciated against the rest of the major currencies. USDCAD at the London close was flat for the day.
