(30 JULY 2020)DAILY MARKET BRIEF 2:Oil prices remained steady near the $41
Oil prices remained steady near the $41 per barrel even with the announcement of a surprise 10-million-barrel slump in US oil inventories last week. There is a clear toppish sentiment in oil markets where the hesitation to carry the prices higher could trigger a retracement below the $40 pb. Prospects of slower economic recovery and the OPEC’s hurry to trim production cuts point that the demand/supply dynamics are not supportive of further short-term gains in oil markets.
The US dollar remains unloved as dovish Fed boosts inflationary pressures. The US treasury yields remain at depressed levels.
Rising inflation expectations in the US mean that even a slightest uptick in inflation would send the real yields to negative levels, if they are not there yet. As such, the zero/negative real rate environment continues giving a solid support to gold. The yellow metal sees buyers below the $1950 per oz.
The EURUSD tests the 1.18 offers on the back of a weakening US dollar. The German GDP data is expected to reveal a 9% decline in the second quarter. Yet, given that the cataclysmic second quarter economic performance is already priced in, the worst GDP read on record should not have a significant impact on the market mood, as long as the figure remains parallel to analyst expectations.
Cable flirts with the 1.30 resistance on soft US dollar. No-deal Brexit worries could limit the sterling’s upside potential but will unlikely stop its rise against the greenback in the short term.
