Crude Oil Rises on API, DAX Exposed to Juncker/Trump Meeting - US Market Open
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US equity futures slightly softer (DJIA -0.4%, Nasdaq 100 flat, S&P 500 -0.1%) today with slight underperformance in the Dow Jones as Boeing shares dropped 3% after their lowered their EPS guidance. As a reminder, Boeing is the largest weighted stock in the DJIA, at 10%. Elsewhere, no signs of China-US trade tensions de-escalating as Trump renewed his threat on China having stated that the “US was being nice on China, until now”.
USD: The US Dollar has seen a pullback in recent trade with the break below the 200HMA in USDCNH a potential catalyst. However, President Trump’s comments made last Friday over concerns about an overvalued Dollar continue to raise suspicion among USD longs, which has been somewhat of a crowded trade of late. Focus will be on the Juncker and President Trump meeting as they look to de-escalate trade tensions and avoid auto tariffs.
AUD: Overnight saw the release of the latest Australian CPI data for Q2 whereby the headline figure printed at 2.1%, however, underwhelmed expectations of 2.2%. The RBA’s preferred measure of inflation, which is the trimmed mean, rose 1.9%, below the central bank’s target band of 2-3% for a 10th consecutive quarter. Looking closely at the numbers, CPI for market services, which excludes prices controlled by the government, were up 1.1%, implying that core inflation is simply not rising. Consequently, this calls for RBA inaction with markets not fully pricing in a 25bps hike until the beginning of 2020. As such, AUDUSD remains soft however, 0.7400 continues to offer support for the pair.
Crude Oil: Brent and WTI crude futures are firmer this morning amid reports that US crude and fuel stockpiles fell more than expected, according to the latest API data. Crude oil inventories dropped 3.2mln barrels (Exp. 2.3mln), while gasoline stocks fell 4.9mln barrels (Exp. 713k barrels). Consequently, eyes will be on the latest DoE crude inventory report.
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IG Client Sentiment Index: DAX Chart of the Day
Germany 30: Data shows 49.4% of traders are net-long with the ratio of traders short to long at 1.03 to 1. The number of traders net-long is 2.7% higher than yesterday and 23.8% higher from last week, while the number of traders net-short is 2.5% higher than yesterday and 11.1% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Germany 30 prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current Germany 30 price trend may soon reverse lower despite the fact traders remain net-short.
Five Things Traders are Reading
- “EUR/USD Consolidates Ahead of Juncker-Trump Meeting; ECB Tomorrow”by Christopher Vecchio, CFA, Senior Currency Strategist
- “Trading Outlook for USD, Euro, GBP Crosses, Gold Price & Others” by Paul Robinson, Market Analyst
- “GBP Could Recover Further as Brexit Concerns Recede”by Martin Essex, MSTA, Analyst and Editor
- “European Markets on Edge as Juncker and Trump Go Head-To-Head”by Justin McQueen, Market Analyst
- “Bitcoin (BTC) Price: Bought the Rumor, Now Sell the Fact?” by Nick Cawley, Market Analyst
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.firstname.lastname@example.org
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