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Market Wrap
In terms of Tier 1 data today the UK GDP estimates were bullish, especially the month-over-month for June which came in at 1.0% and the headline figure for the 3M/3M quoted by the Chancellor today of 4.8%, came in as expected.
US PPI released before the US futures open came in better than expected with US PPI ex Food and Energy coming in at 6.2%,
We also received ahead of the US open, the US Initial Jobless Claims, which also came in as expected at 375k with a slight revision higher for the previous week from 385k to 387k.
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I must admit I was hoping for a quick push higher out of the descending channel for the GBPUSD, but the US dollar strength today has kept the pound within the channel and pushed it down to a previous level of support which could now be acting as a demand level. If the 1.3800-1.3815 doesn’t hold, there is another chance to look for a long at the base of the descending channel.
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The US dollar had been making new daily higher highs for the previous 6 days and yesterday’s turnaround following the CPI data did enough to drop the US dollar below the reach of the previous day’s high in today’s trading. If there is a sudden spurt higher before the US close that would be very bullish for tomorrow, but the way things are currently looking, the US dollar index is forming a new swing high below the previous. So, a quick dip down to $92.20 is on the cards, with the double top leaving a lot of stop loss orders above ready to be grabbed when we find new buyers at the dynamic support from the moving averages. That may seem a little presumptuous, but I have seen it many times where the market likes to get everyone long or short, to then stop them out on a reversal only to carry on in the original direction. Currently the trend is higher.
The S&P500 has made new highs, whereas the Nasdaq is still correcting lower. For the week the Dow Jones is making the best gains as it is up 1.09%, with the S&P500 up 0.50% and the Nasdaq red for the week as it is down -0.87%. It is probably safe to say that if the Nasdaq goes green the sentiment towards the Fed tapering and possibly hiking rates has taken a knock. The UK FTSE 100 is doing better than its American peers as it is up 1.13% for the week, though it has given some ground back today coming in lower at -0.51% at the London close.
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The Organization of the Petroleum Exporting Countries (OPEC) still believes that previous global oil demand forecasts for 2021 and next year remain true. OPEC released a report today that expects crude demand to average 96.6 million barrels per day in 2021. For 2022 their expectations are for oil demand to rise by 3.3 million b/d to average 99.9 mb/d, while exceeding the 100 mb/d mark in the H2 of 2022. The Oil price is trading near todays open and is compressing under the 20 and 50 daily ema’s. However, yesterday’s price action should have done enough to get see higher prices in the coming days as it cleared most of the balance area from last week. If that is true, the next logical target is the $73 level.
