OIL PRICES SWITCH TO NEGATIVE AHEAD OF FOMC
The EUR/USD price declined ahead of today’s publication of the FOMC meeting minutes at 18:00 GMT. Investors may see new hints concerning another round of monetary policy tightening in 2017. At the same time, the ECB’s official Coeure said that questions of change in monetary policy settings in the monetary union were not discussed in the ECB. The divergence between the key interest rates in Eurozone and the USA has been pressuring the EUR/USD quotes during the last few years. The positive data from the euro area on services PMI growth to 55.4 in June against the forecasted 54.7 and increase of retail sales by 0.4% in May was not able to change the bearish sentiment on the market.
The sterling was also under pressure from a stronger US dollar and negative dynamics accelerated after the report on services PMI that in June declined to 53.4, compared to the expected 53.6. Anticipation on the outcome of negotiations concerning the terms of Brexit will also restrain the bulls from strong buying in the near future.
Oil broke its winning streak after Russia refused from further crude oil production cuts in the agreement between most OPEC members and some other major oil-producing countries, including Russia. Global supply glut remains the main fundamental factor that’s supporting sellers on the market. Recent fears about fruitless efforts on oil output reduction have strengthened amid rising supplies from Libya and Nigeria. The weekly report on oil inventories in the US will be released tomorrow and will likely provoke an increase in volatility.
The common currency quotes resumed to decline after some consolidation around the upper limit of the descending channel. The nearest targets in case of a continued fall will be at 1.1300 and 1.1200. In order to change the local trend to positive, quotations need to overcome the local maximums near 1.1365. Volatility growth is expected after the publication of the FOMC meeting minutes at 18:00 GMT.
The GBP/USD price was able to break through the lower boundary of the ascending channel. The trigger for the drop acceleration may come from breaking through 1.2890. In this case, a fall will be possible to 1.2800 and 1.2750. After a long consolidation within the narrow range its possible to see a sharp movement in either direction. In order to resume increasing with potential objectives near 1.3030, the price has to overcome resistance at 1.2950.
The spike in demand for gold after the launch of the long-range missile in North Korea was short-lived. As a result of the dollar strengthening and the possible increase on the stock markets during the month amid earnings season, we may see a further decline in interest in gold, especially due to rising yields in the US and Europe during the last few weeks. For the trend change to positive, precious metal needs to overcome the important 1240 level. Purchases of the yellow metal may resume in the 1180-1200 range.
The sharp decline of the American crude oil benchmark started amid the news about Russia’s decision to rule out the possibility of further oil production cuts. The fall accelerated amid profit taking after a long series of winning sessions. Overcoming the support at 45.50 will open the way for further price decline with potential goals at 44.25 and 43.00. An upward rebound is possible up to 46.00.