The latest weekly report from the US Energy Information Administration delivered what Saxo Bank head of commodities strategy Ole Hansen calls "a trifecta of bullish news" for crude with WTI surging to resistance at $63.15/barrel.
"Stocks are down, production is flat, and exports are surging," notes Hansen, adding that the rally in WTI brings prices to the 61.8% retracement of the January-February selloff. "If we break through this level, we can say that we have established a bottom," Hansen concludes.
Gold, meanwhile, has endured its worst week since early December on the back of a stronger USD and a hawkish federal Open Market Committee, but in Hansen's view the US rate hike calendar is not necessarily gold-negative given the metal's history of quick recoveries from rate rises.
"Expectations for four rather than three 2018 rate hikes are growing, but the hikes are not really the issue as far as gold is concerned; instead, it's the speed of the hikes," says Saxo's commodities head.
In forex, Saxo head of FX strategy John J Hardy reports that the dollar remains stable following a suite of massive US Treasury bond auctions totaling $279 billion. "Demand for Treasuries remained within range despite the massive size of the auctions, so we see a broad lack of concern on the greenback," he notes.
Despite the dollar's strength, USDJPY fell lower Thursday with the yen now trading at some remove from broader market movements. "It feels like the market may be reassessing some its assumptions on the Japanese currency," says Hardy, "adding that in his view the yen remains "quite cheap".
One way to play the strong yen trend is through EURJPY, where prices are currently sitting at the 200-day moving average, with Hardy noting that a break of this level could see a pronounced move lower.
Finally, next week sees a key event for USD and FX in the form of Federal Reserve chair Jerome Powell's address to Congress Wednesday.
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.