OPEC+ Delays Meeting, U.S. Nonfarm Payrolls Are Under The Radar
JFD Team | Jul 02, 2021 04:20AM ET
Yesterday, we received slightly disappointing manufacturing PMI data from various countries across the globe. Nevertheless, the numbers stayed in expansionary territories. OPEC+ delays meeting due to disagreements in production output. Today, the spotlight may fall on the US NFPs, as the Fed will keep a close eye on the jobs numbers as well.h2 Slight Disappointment In The Data /h2
It was quite an eventful day yesterday, in terms of economic data releases. Thursday’s morning kicked off with China delivering its Caixin Manufacturing PMI figure, which showed up at 51.3, when the initial expectation was for a slight decline only from the previous 52.0 to 51.8. Although the actual number came as a disappointment, market participants are still keeping their “positive hats” on, as the number still shows that Chinese manufacturing remains in expansionary territory. UK’s manufacturing PMI also failed to beat the forecast and came out at 63.9, against the initially expected 64.2. The British currency was the biggest loser yesterday among its major counterparts.
The US dollar was the strongest yesterday, as it took the role of a safe-haven, due to a slight disappointment in the US data releases. Although the US initial jobless claims were on the better side, as the number came out below the initial forecast, the continuing jobless claims failed to beat expectations. This means that despite a small decline in the number of new people filing for unemployment benefits, there is still a vast number of US citizens continuing to seek financial support from the government. The ISM manufacturing PMI for June also came out as a disappointment, at 60.6, which is slightly below the initial forecast of 61.0, which was already lower than the previous 61.2. Although the US indices closed in positive territory, the gains were on the modest side.
Also, yesterday, the OPEC+ meeting got delayed until Friday, apparently due to UAE not agreeing with the proposed increases in production of barrels per day. There were reports that Kazakhstan and Iraq also supported UAE, as their economies heavily depend on oil prices and any increase in production could bring the price of oil lower. The main countries that were for the increase were Saudi Arabia and Russia, stating that the rise in bpd would be justified, due to a jump in global demand, as economies are working on post-covid recoveries. If the agreement is reached and the countries agree to an increase, we might see oil correcting slightly to the downside, however, the current global demand may still push oil prices further north.
h2 WTI OIL Technical Outlook/h2
Get The News You Want
WTI oil made a strong move north yesterday, overcoming the June high, at 74.54. The commodity is also trading above a couple of short-term tentative upside lines, a steeper one taken from the low of June 29, and another one drawn from the low of May 21. As long as both of those line remain intact, we will continue aiming higher.
The price may correct a bit lower, however, if the commodity stays somewhere above one of the aforementioned upside lines, the bulls could take advantage of the situation and push WTI oil higher again. The price might rise to yesterday’s high, at 76.29, where the commodity could stall for a bit. However, if the buying continues, the buyers may overcome that obstacle and drag WTI oil towards the 76.79 hurdle, or the 77.77 level.
In order to consider the downside, a break through both of the previously mentioned upside lines is needed. In addition to that, if the price falls below the 72.90 zone, marked by the low of June 30, that may attract more bears into the field. WTI oil might slide to the 72.07 area, a break of which could clear the path towards the 70.92 level, marked by the low of June 21.
Today, the spotlight most likely will fall on the US jobs data for the month of June. The non-farm payroll figure is believed to have improved, going from the previous 559k to 700k. The unemployment rate is also expected to drop by a bit, falling from 5.8% to 5.7%. If the forecasts are true, this could be a good sign for the overall US economy. However, market participants who are invested in equities, might get a bit worried, as better data could force the Fed to revise their current strategy and push towards raising interest rates slightly earlier. This might have a negative effect on stock prices, as higher borrowing costs could make riskier assets, such as equities, less attractive.
h2 USD/JPY Technical Outlook/h2Yesterday, USD/JPY continued its journey to the upside and remained above the highest point of June, at 111.11. At the time of writing, the pair is finding strong resistance near the 111.66 barrier. At the same time, the rate is trading well above a short-term upside support line taken from the low of May 25th. For now, we will stay positive with the near-term outlook.
If USD/JPY eventually bypasses the 111.66 barrier, this will confirm a forthcoming higher high, potentially setting the stage for a further move north. That’s when we will aim for the 112.22 obstacle, which is the highest point of 2020, where a temporary hold-up may occur. That said, if the buying doesn’t stop there, the next possible target could be at 112.40, or even at the 112.66 level, marked near the low of December 17th and the high of December 19th of 2018.
Alternatively, if the rate suddenly falls back below the 111.02 zone, marked by yesterday’s low, that could open the path towards the 110.75 obstacle, a break of which may lead to a test of the 110.42 level, marked by the low of June 30th. Around there the pair might also test the aforementioned upside line, which could provide additional support.
We have Canada’s trade balance and the US factory orders, all for May. Canada’s trade surplus is forecast to have declined somewhat. US factory orders are expected to have rebounded after sliding in April.
Disclaimer: The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.05% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure .
Copyright 2021 JFD Group Ltd.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.