Oil price volatility picked up with rising oil demand fears as the Delta variant rapidly spreads. And with oil inventory data hitting the wires soon, the short-term downtrend one to watch for a potential short-term setup in the Asia and London session.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a break-and-retest setup on EUR/NZD, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
Equity Markets Bond Yields Commodities & Crypto
DAX: 15770.71 +0.16%
FTSE: 7161.04 +0.40%
S&P 500: 4436.75 +0.10%
NASDAQ: 14788.09 -0.49% US 10-YR: 1.349% +0.032
Bund 10-YR: -0.457% -0.001
UK 10-YR: 0.591% +0.001
JPN 10-YR: 0.022% +0.013 Oil: 68.43 +2.93%
Gold: 1,729.70 +0.18%
Bitcoin: $45,510.00 -1.08%
Ethereum: $3,143.82 -0.51%
Fresh Market Headlines & Economic Data:
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U.S. small business optimism drops as labor shortages persist
U.S. productivity growth slows in Q2; labor costs revised down in Q1
Oil up 3%; forecast for better U.S. fuel demand feeds rebound
Eurozone ZEW economic sentiment index slumped from 61.2 to 42.7
German ZEW economic sentiment index down from 63.3 to 40.4
Germany ZEW economic confidence declines sharply
Mounting Delta variant risks halt gold’s slide
Outgunned crypto lobbyists falter in bid to fix broad tax rules
Cross-chain DeFi site Poly Network hacked; Hundreds of millions potentially lost
Upcoming Potential Catalysts on the Economic Calendar
API Crude Oil Inventory Change at 8:30 pm GMT
Japan M2 Money Supply at 11:50 pm GMT
Australia Consumer Confidence at 12:30 am GMT (Aug. 11)
Australia New Home Sales at 4:00 am GMT (Aug. 11)
Germany Inflation Rate at 6:00 am GMT (Aug. 11)
Japan Machine Tool Orders at 6:00 am GMT (Aug. 11)
Italy Inflation Rate at 8:00 am GMT (Aug. 11)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: Oil
Oil hits the top of the watchlist today as it tends to be a short-term mover on the weekly oil inventories report. This week, expectations are for a smaller drawdown than the previous drawdown of -1.05M barrels, and if so, that could spark a slightly bearish reaction in the price of oil.
Even as this data series shows that inventories are shedding barrels on net every week, it’s been at a slowing pace through the last four weeks, with even one week in July showing an inventory increase. Traders could take this as a signal confirming a slowing demand for oil and continue to put pressure on the commodity in the short-term.
In terms of price action, the market has recently bounced after hitting the July lows just above the $65.00 handle. Traders took the market back up to the $69.00 handle in today’s session, and the question now is whether or not this strong area of interest will draw in sellers of the new trend lower. We can see a couple of bearish arguments (e.g., bearish divergence, previously strong resistance) that suggests short-term technical trend traders may take bearish shot at the very least.
We’ll be watching the $69.00 – $70.00 area for bearish reversal patterns if the upcoming oil inventory data comes in weaker-than-expected. If that scenario plays out and broad risk sentiment continues to lean negative on Delta variant worries or the U.S. dollar sees strength off tapering speculation, a move to the $66.00 handle is not out of the question within one session given the average daily true range of around $2.28.
