Crude oil looking beyond short-term challenges
Crude oil and natural gas have both for different reasons been lagging some of the blistering pace of other commodities this past week. While several key raw materials from copper and iron ore to corn and palm oil have reached record or multi-year highs, the oil market has been focusing on the impact of the Colonial pipeline hack and the uneven recovery in global fuel demand. Reflation demand for commodities remain with today's U.S. CPI data being an important guide to future investor behavior.
FX Update: USD downtrend looking for fresh fuel, or else.
The markets have pressed the pause button on the recent USD sell-off, as rising long US yields and rocky risk sentiment have offered some support and fundamental support for the move via widening yield spreads and other factors is not particularly in evidence. With the US CPI up today and Fed Vice Chair Clarida, perhaps the logjam can be broken for the USD bears, otherwise the risk of a reversal grows apace.
Market Quick Take - May 12, 2021
Asian equities suffered a complete rout overnight, led by what can arguably be dubbed a crash in Taiwan on reports of forced selling and option expiry. The Japanese Nikkei 225 also suffered a deep sell-off that has taken that average below major support. Other markets are showing far less volatility, particularly foreign exchange, although the recent breakout lower in the US dollar is threatening a reversal after the action overnight.
Ethereum outperforming, despite limitations
Ethereum outperformed Bitcoin over the past week, but limitations appear in the Ethereum technology, and JPMorgan analysts suggest ETH price should be significantly lower based on network activity. Furthermore, multiple ETF applications in the US are still pending, but may be in a new headwind.