Two trades to watch: GBP/USD, WTI oil
Fiona Cincotta July 14, 2021 2:29 PM
GBP/USD snaps two day losing run after UK CPI came in higher than forecast. WTI oil slips after Chinese oil imports fall in H1. EIA data in focus.
GBP/USD rises after UK CPI beat, Powell in focus
GBP/USD ended Tuesday firmly in the red for the second straight session as the US Dollar was boosted by surging inflation. Today the pair is pushing higher after higher than forecast UK inflation.
UK inflation rose 2.5% YoY in June, up from 2.1% in May. Consensus estimates pointed to 2.2% rise. This remains above the BoE’s 2% target. On a monthly basis CPI rose 0.5%, down slightly from 0.6% but ahead of 0.2% forecast prompting speculation that he BoE could tighten monetary policy sooner.
The US Dollar is consolidating after hitting a 3-month high in the previous session. US CPI jumped 0.9% MoM, the fastest rate since 2008 and rose 5.4% YoY ahead of the tick lower to 4.9% forecast.
Bets are rising that the Fed could move to tighten monetary policy sooner.
Fed Chair Jerome Powell is due to testify before Congress today, investors will be watching closely for any clues over the direction of monetary policy.
Where next for GBP/USD?
After hitting 1.39 in the previous session, GBP/USD fell back through its 50 sma before finding support on the month old descending trendline. The price has pushed tentatively back over its 50 sma. The RSI is at 50 so neutral but pointing higher.
Buyers will be looking for a sustained move over the 50 sma in order to look back up towards 1.39.
Should the 50 sma support fail to hold, the price could look tyo test the descending trend line at 1.3790. A move below this level could see more sellers jump in and head towards 1.3740.
Oil slips after disappointing Chinese import data, EIA inventories in focus
Oil is trading mildly lower after data revealed that China’s crude oil imports dropped in the first half of this year, sparking demand concerns.
China’s crude imports declined by 3% in H1 YoY, the first contraction since 2013 amid signs that surging prices are hurting demand.
OPEC+ still hasn’t agreed to raise output, keeping prices elevated.
API data revealed a slightly weaker than forecast 4.079 million barrel draw, down from 7.98 million last week
EIA crude oil supply data is due later today.
Where next for WTI crude oil?
WTI oil trades above its multi-week ascending trendline and above its 50 & 200 sma on the 4 hour chart keeping bulls optimistic.
The RSI is in bullish territory, and attempting to aim higher, suggesting there could be more upside to come.
Any move higher would need to take out 75.00 in order to head towards 76.40 the multi-year high and then on to fresh multi year highs.
Sellers could look for a move below the 50 sma at 74.00 in order to test the ascending trendline at 7320 and the weekly low of 72.60. A breakthrough here could expose the 200 sma at 71.50.
How to trade with City Index
Follow these easy steps to start trading with City Index today:
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.