Crude Oil Inventories surprised the markets with a surplus of 1.4 million last week

US crude is trading just below the $40 level on Wednesday. In the North American session, WTI/USD futures are trading at $39.97 Brent crude is trading at $42.54, as the Brent premium has widened t0 $2.57. On the release front, Crude Oil Inventories gained 1.4 million, surprising the markets which had expected a decline. ADP Nonfarm Payrolls improved to 179 thousand, beating the estimate. The ISM Non-Manufacturing PMI came in at 55.5 points, short of expectations. On Thursday, the US releases Unemployment Claims and the RBA will publish a monetary policy statement.
Crude Oil Inventories surprised the markets with a surplus of 1.4 million last week. The estimate stood at -1.6 million. The gain underscores the oversupply of crude on world markets, which has weighed on oil prices. US crude has broken below the symbolic $40 level, and with producer countries showing little appetite to curb output, the downturn in prices could continue.

The British pound is showing little movement on Wednesday

The British pound is showing little movement on Wednesday. Early in the North American session, GBP/USD is trading at 1.3340. On the release front, it’s a quiet day. British Construction PMI was unchanged at 47.4 points, matching the forecast. In the US, there are two key indicators on the schedule. ADP Nonfarm Employment Change improved to 179 thousand, beating expectations. Later in the day, the US releases ISM Non-Manufacturing PMI. On Thursday, we could see some volatility from the pound, as the the BoE is widely expected to lower interest rates, Over in the US, the key event is Unemployment Claims.
•GBP/USD has shown limited movement in the Wednesday session
•1.3219 is providing strong support
•1.3359 was tested earlier in resistance and is a weak line. It could break in the North American session
Further levels in both directions:
•Below: 1.3219, 1.3142, 1.3064 and 1.2938
•Above: 1.3359, 1.3513 and 1.3667
•Current range: 1.3219 to 1.3359
GBP/USD ratio has shown slight gains in short positions. Long and short positions are close to an even split, indicative of a lack of trader bias as to what direction GBP/USD will take next.

XAU/USD ratio has shown slight gains in short positions

XAU/USD ratio has shown slight gains in short positions. Long positions command a strong majority (60%), indicative of trader bias towards XAU/USD continuing to move upwards. Gold prices continue to move higher this week as the disappointing US GDP report has weighed on market sentiment. Preliminary GDP for the second quarter disappointed, as the markets had expected a strong gain of 2.6%, while the economy responded with a much smaller gain of 1.2%. A September rate hike appears less likely, given recent economic data. On Sunday, FOMC William Dudley, a close ally of Janet Yellen, said that the Brexit fallout posed a risk to the US economy and urged the Fed to proceed with caution before raising interest rates. The US will release wage growth and nonfarm payrolls later in the week, and these key employment numbers will be carefully monitored by the Fed as it mulls over a possible rate hike. The markets have circled September and December as the most likely dates for a rate hike, but if the Fed isn’t satisfied with the economy’s performance, it could delay any moves until 2017

The USD/JPY ratio has little movement on Tuesday

The USD/JPY ratio has little movement on Tuesday. Currently, long positions have a majority (65%), indicative of trader bias towards USD/JPY reversing directions and moving to higher ground.
•USD/JPY was flat in the Asian session and has posted considerable losses in the European session
•101.20 is providing support
•There is resistance at 102.36
•Current range: 101.20 to 102.36
The Japanese yen has posted gains on Tuesday, following a lackluster start to the week. USD/JPY is currently trading at 101.80. On the release front, Japan announced the first step in its stimulus package, totaling JPY 13.4 billion. Japanese Consumer Confidence came in at 41.3, short of expectations. We’ll get a look at the BoJ minutes later today. In the US, today’s major event is Personal Spending, with the estimate standing at 0.3%. On Wednesday, the US releases two key events – ISM Non-Manufacturing PMI and ADP Nonfarm Employment Change.

Oil chart

Just as it looked as though we may see a correction in Brent crude as it ran into support around a key zone, it’s taken another dip lower breaking through the lower bound of the support zone and the 200-day simple moving average in the process.

 

EUR/USD breaking out and moving lower.

The euro is unchanged on Monday, following sharp gains in the Friday session. EUR/USD is currently trading at 1.1170. On the release front, manufacturing PMIs are in focus in both the Eurozone and the US. German Manufacturing PMI came in at 53.7, while Eurozone Manufacturing PMI showed a reading of 52.0. Both figures were very close to the estimates. Later in the day, the US will release ISM Manufacturing PMI. Little change is expected in the July reading, with an estimate of 53.1 points.
The euro gained closed to 100 points on Friday and closed the week at 1.1170, its highest level since the Brexit vote in late June. The euro took advantage of a surprisingly soft US GDP report. Preliminary GDP for the second quarter was projected at 2.6%, but posted a much smaller gain of 1.6%. The soft reading not only pushed the dollar lower, but has dampened enthusiasm regarding a rate hike by the Fed, which last week stayed on the sidelines yet again.EUR/USD ratio showed gains in long positions on Friday, consistent with strong gains by EUR/USD on Friday. Short positions have a strong majority (63%), indicative of trader bias towards EUR/USD breaking out and moving lower.

GBP/USD ratio is almost unchanged on Monday

GBP/USD ratio is almost unchanged on Monday, consistent with the lack of movement from GBP/USD. Long positions have a majority (55%), indicative of trader bias towards GBP/USD breaking out and moving higher.
•GBP/USD posted gains in the Asian session. The pair reversed directions in the European session and posted sharp losses. The pair is unchanged early in North American trade
•1.3142 is providing support
•1.3219 was tested in resistance earlier and is under pressure
The British pound has posted small losses at the start of the week. In Monday’s North American session, GBP/USD is trading at the 1.32 line. On the release front, British Manufacturing PMI dipped to 48.2 points, below the estimate of 49.1. Later in the day, the US will release ISM Manufacturing PMI, a key indicator. Little change is expected in the July reading, with an estimate of 53.1 points. On Tuesday, the UK will publish Construction PMI, with the markets bracing for a weak reading of 44.2 points.
British PMI reports are important gauges of economic activity, and the week kicked off on a sour note. Manufacturing PMI came in at 48.2 points in July, following the previous release which also indicated contraction in the manufacturing sector. There are growing worries that third quarter data such as PMI reports will point to a weakening British economy, due to the fallout from the Brexit vote. Construction and Services PMIs are also expected to contract, and this could weaken the pound. The markets will also be keeping a close eye on the BoE, which is widely expected to cut interest rates when it meets on Thursday. The BoE surprised the markets in July when it maintained rates at 0.50%, but faces losing credibility if it stays on the sidelines again. The bank hasn’t lowered rates since 2009, so such a dramatic move could push the pound to lower levels.