(24 JUNE 2020)DAILY MARKET BRIEF 2:WTI rally gives signs of exhaustion above the $40

In the currencies market, the US dollar edges lower.

In the dearth of important economic data and event, the EURUSD looks set for further gains. Due later this morning, the latest Ifo survey will likely confirm an improved business sentiment in Germany. A strong read should help boosting interest in euro and euro-denominated equities.

Cable, on the other hand, consolidates gains near the 1.25 mark. Here also, the major driver is the soft US dollar, but the recent rise in optimism regarding a possible Brexit deal by the end of this year keep the sterling bears on the sidelines for the moment. Meanwhile, Boris Johnson announced the dramatic end of confinement measures in July, which is a big gamble to boost the British economy despite lingering risks on public health.

Elsewhere, the WTI rally gives signs of exhaustion above the $40 per barrel on the back of building US inventories. The latest API data printed a 1.75-million-barrel rise in US stockpiles last week, versus 300K expected by analysts. The more official EIA data should confirm a third straight week rise in inventories. Failure to extend gains above the $40 mark should trigger a temporary negative correction in oil, yet the downside should remain limited near the 100-day moving average, $33.80 pb.

By Ipek Ozkardeskaya