2023-10-10 03:55

OIL PRICE FORECAST: Oil Benefits from Middle East Tensions as Market Participants Fear Supply Disruptions. OPEC Upgrades Demand Forecasts for the Medium and Long-Term. Is an Oil Embargo Akin to 1973 a Possibility? To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. Oil prices have held relatively steady through the European session following the gap in prices over the weekend. WTI closed last week at $82.74 a barrel before opening last night around the $85.00 a barrel mark as the turmoil between Israel and Palestine intensified. MIDDLE EAST SPILLOVER AND WHAT IT WOULD MEAN FOR OIL PRICES? The selloff in oil last week was welcomed by Central Banks and consumers alike as fears around a rise in inflation took a back seat. The start to the week however may re-ignite these fears as Oil is now trading back above the $86 a barrel mark. Market participants appear concerns by the prospect of a spillover from the Israel- Palestine conflict to the rest of the Middle East. This is largely down to ongoing rhetoric and public discourse speculating on Iran’s involvement, something which to now World Leaders have not commented on. Israel who has been in negotiations with Saudi Arabia to normalize relations last week has said they would not like to jeopardize negotiations while promising that the Israeli response will change the face of the Middle East. Market participants did fear the worst from Saudi Arabia and OPEC with a potential embargo viewed as the worst-case scenario. OIL EMBARGO 1973, A RE-RUN OR COMPLETELY DIFFERENT SITUATION? For those who like me are born after 1973, we are not familiar with Oil embargo imposed by Saudi Arabia and OAPEC (Arab members of the Organisation of Arab Petroleum Exporting Countries). The oil embargo initiated by Saudi Arabia, along with other Arab members of the Organization of Arab Petroleum Exporting Countries (OAPEC), began on October 17, 1973. This event is commonly referred to as the "1973 oil crisis" or the "Arab oil embargo." The embargo was a response to the support provided by Western countries, particularly the United States, to Israel during the Yom Kippur War, which began on October 6, 1973. The oil embargo resulted in significant disruptions to oil supplies worldwide and had a profound impact on global energy markets. Market participants had feared the potential of a similar outcome but the current dynamics between the US and Saudi are different. The current negotiations between the Saudi’s and Israel around normalizing relations remains up in the air but looking positive as the US would agree to a defense deal with the Kingdom in exchange. The first comments from the Saudi regime also stuck to the old rhetoric of two-state solution and called for an end to the violence which by now has become the go to comments in the Israel-Palestine conflict. The more realistic option at this stage remains tighter sanctions on Iranian Oil as we have seen rhetoric ramped up in some quarters blaming the current Iranian Regime for orchestrating such attacks. Iran has recorded a production increase over the past 12 months to about 600k barrels a day and have also been selling some of its stockpiles both on and offshore, which had kind of offset the cuts by Russia and Saudi Arabia. Will the West impose tougher sanctions on Iran? OPEC ANNUAL FORECAST OPEC today raised its demand forecast for the medium and long-term in an annual outlook. The organization stated around $14 trillion of investment may be needed to meet the demand and confirmed that it sees demand going higher than it perceived before the Pandemic. The group also doubled down on its belief that Oil should form a part of the energy transition otherwise we are in for a energy and economic chaos. Source: Refinitiv RISK EVENTS AHEAD US inflation data was supposed to be the driving force for markets this week but is now likely to be overshadowed by the Geopolitical tensions. Little on the docket from the US tomorrow with PPI and the FMC minutes on Wednesday, developments around Israel-Palestine could continue to be a catalyst and drive the market mood and risk appetite. TECHNICAL OUTLOOK AND FINAL THOUGHTS From a technical perspective both WTI and Brent have opened higher overnight and continued their advance before a slight lull and wait and see approach in the US session saw a slight pullback. I would personally like to see the gap close, however last time Oil gapped up quite a bit it took around 20 days for it to finally close the gap. History to repeat itself? WTI Crude Oil Daily Chart – October 9, 2023 Source: TradingView Key Levels to Keep an Eye On: Support levels: 81.25 80.00 78.98 (100-day SMA) Resistance levels: 87.00 88.30 90.00 (psychological level) Brent Crude continues to look like a mirror image of WTI with the 14-day RSI finally giving Brent some impetus to rally higher. Brent has run into a spot of bother though finding resistance around the 88.00 mark which lines up with 50-day MA. Brent Oil Daily Chart – October 9, 2023 Source: TradingView https://www.dailyfx.com/news/opec-raises-demand-forecast-as-middle-east-tensions-boost-wti-oil-prices-20231009.html

2023-10-10 03:53

JAPANESE YEN, DXY PRICE, CHARTS AND ANALYSIS: USD/JPY Edges Lower as the DXY Fails to Sustain Early Gains. Yen and the Dollar Appear to Cancel Each Other Out as Markets Flee to Safety. IG Client Sentiment Shows Retail Traders are Overwhelmingly Short on USD/JPY, with 82% of Trdaers Holding Short Positions. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. YEN FUNDAMENTAL BACKDROP The Japanese Yen has been a surprise beneficiary of the tension in the middle east. The last 12 months has seen the US Dollar benefit more than the Yen from safe haven flows, something which seems to have reversed this week. USDJPY has fallen today as the DXY itself struggled to hold onto European and Asian session gains. Today marks 6 months since Kazuo Ueda became the Governor of the Bank of Japan (BoJ). According to insiders Ueda was appointed against the odds to lead the BoJ toward policy normalization. We have had a tweak to the YCC policy but continued rhetoric from the Governor suggests that policy normalization remains some way off. Governor Ueda has constantly spoken about the need for wage growth to exceed inflation on a consistent basis. 2024 Shunto Spring labor-management negotiations at private sector companies is likely to be key to Ueda’s plans for policy normalisation. BOJ ON THE BOND PURCHASE OFFENSIVE, MORE TO COME? Last week saw the BoJ conduct a large-scale bond buying operation in an effort to bolster the Japanese Yen just as USDJPY crossed the 150.00 threshold. The immediate response was a quick drop of around 250 pips followed by a swift recovery. The BoJ first announced the extraordinary purchases on October 2. In its statement, it said “the bank will make nimble responses by, for example, conducting additional outright purchases of JGBs.” Now interestingly last year saw a similar response to the initial intervention by the BoJ with a spike lower before printing a fresh high. This was the precursor for what turned out to be quite a sizeable drop in USDJPY. This poses the age-old question, is history about to repeat itself? DOLLAR INDEX (DXY) The Dollar Index looked set for a drop this week following a shooting star candle close last Friday of a key area of resistance. The start of the Israel-Palestine conflict over the weekend however, seemed to have re-energized the US Dollar. As the day has progressed however, the DXY has surrendered its gains with a lot of geopolitical uncertainty and US CPI still ahead this week. From a technical perspective the Dollar Index (DXY) continues to struggle at the 107.00 resistance area. At this stage however, I am not yet convinced that the US Dollar rally has fully run its course. Given the fundamental backdrop and geopolitical situation the chance of another retest of the 107.00 mark remains a possibility. Dollar Index (DXY) Daily Chart Source: TradingView, prepared by Zain Vawda RISK EVENTS AHEAD Besides the ongoing geopolitical tensions, markets were poised for the all-important US CPI print this week. The importance cannot be undermined in light of the recent uptick in headline inflation with another hot print likely to ramp up recessionary fears but should be positive for the USD from a safe haven perspective. Either way it seems the USD is well poised as Q4 unfolds. There is quite abit of mid-tier data out of Japan this week but unlike the US, these individual data points generally have a limited impact on the Yen. This is largely down to the monetary policy stance of the BoJ, as none of these data releases are likely to result in a change in policy, regardless of the actual number. For all market-moving economic releases and events, see the DailyFX Calendar PRICE ACTION AND POTENTIAL SETUPS USDJPY Key Levels to Keep an Eye On: Support levels: 148.00 146.69 (50-day MA) 145.00 Resistance levels: 149.30 150.00 (Psychological level) 152.00 (2022 Highs) USD/JPY Daily Chart Source: TradingView, prepared by Zain Vawda https://www.dailyfx.com/news/dollar-index-dxy-retreats-as-usd-jpy-ticks-lower-145-00-incoming-20231009.html

2023-10-10 03:51

CRUDE OIL, WTI, RETAIL TRADER POSITIONING, TECHNICAL ANALYSIS – IGCS COMMODITIES UPDATE Crude oil prices gapped upward, ended Monday 4.35% higher Hamas’s attack on Israel may have oil disruption implications Retail bets are still net-long, what are key levels to watch? Crude oil prices gapped higher at Monday’s open and closed the session 4.35% higher, marking the best single-day performance since early April. This followed weekend developments as Hamas attacked Israel, inflating supply disruption woes. According to Bloomberg, the outbreak “threatens to embroil both the US and Iran”. The latter has recently been a contributor of extra supply this year. In response, retail traders have been increasing upside exposure in crude oil as of late. This can be seen via IG Client Sentiment (IGCS), which often functions as a contrarian indicator. With that in mind, while supply disruption fears may offer near-term support, increasingly bullish retail bets may serve as a bearish prospect for oil. Crude Oil Sentiment Outlook - Bearish According to IGCS, about 73% of retail traders are net-long crude oil. Since most of them remain biased to the upside, this continues to hint that prices may fall down the road. This is as upside bets increased by 19.36% and 94.04% compared to yesterday and last week, respectively. With that in mind, recent changes in IGCS offer an increasingly bearish contrarian trading bias. Looking at the daily chart, WTI bounced off the 38.2% Fibonacci retracement level of 82.99 following recent fundamental developments. This also undermined the breakout under the 50-day moving average, which has since been reversed. Resuming the uptrend entails a push above the 92.62 – 94.98 resistance zone. Meanwhile, breaking under support exposes the midpoint of the retracement at 79.29. Crude Oil Daily Chart Chart Created in Trading View https://www.dailyfx.com/news/crude-oil-price-surge-in-focus-after-hamas-attacked-israel-retail-bets-remain-bullish-20231009.html

2023-10-10 03:50

Gold, XAU/USD, US Dollar, Treasury Yields, Israel, Federal Reserve, GVZ Index - Talking Points The gold price has held the high ground going into Tuesday’s trading session Treasury yields appear to have rolled over after making new highs last week The US Dollar is under pressure despite global uncertainty. Will XAU/USD keep rallying? The gold price bounced hard off a seven-month low to start this week in the aftermath of the outbreak of war in the Middle East, trading back above US$ 1,860 a troy ounce. The perceived haven status of the precious metal helped to underpin but it has also seen the tailwinds of a weaker US Dollar with Treasury yields reversing the gains seen last week. The benchmark 10-year bond eclipsed 4.88% on Friday, the highest return for the low-risk asset since 2007. It has since collapsed below 4.65% this week after dovish comments from Federal Reserve Vice Chair Philip Jefferson and the Dallas Fed President Lorie Logan. Somewhat ironically, both central bankers cited higher long-end Treasury yields as a reason to be less hawkish going forward. The interest rate market has now pretty much ruled out another hike by the Fed and sees a cut by the middle of next year. Recent moves have seen volatility pick up for gold as measured by the GVZ index. This may suggest that further notable moves in the gold price might evolve. The GVZ index measures volatility in the gold price in a similar way that the VIX index gauges volatility in the S&P 500. SPOT GOLD, DXY (USD) INDEX, US 10-YEAR TREASURY AND GVZ INDEX Chart created in TradingView GOLD TECHNICAL ANALYSIS SNAPSHOT The recent sell-off broke below the lower band of the 21-day simple moving average (SMA) based Bollinger Band. Last Thursday it closed back inside the band to signal a pause in the bearish run and the consequent reversal. Click on the banner below to learn more bout Bollinger Bands. Resistance could be in the 1885 – 1895 area where there are a series of breakpoints with the 21- and 260-day SMAs just below that zone, which may add to resistance. Further up, the 100- and 200-day SMA lie ahead of 1930 and could offer resistance. On the downside, support might be at the previous lows of 1810, 1805, 1797, 1785, 1774, 1766 and 1735. SPOT GOLD CHART Chart created in TradingView https://www.dailyfx.com/news/gold-price-rallies-as-us-dollar-slips-as-volatility-ticks-up-higher-xau-usd-20231010.html

2023-10-10 03:48

BRITISH POUND, GBP/USD, EUR/GBP – TECHNICAL UPDATE: British Pound makes progress vs USD and EUR GBP/USD technical outlook remains bearish EUR/GBP still focused on consolidative action The British Pound has been making upside progress against the US Dollar and Euro. With regards to GBP/USD, the past 3 trading sessions have produced a gain of about 0.9%. This is marking the best 3-day performance since the middle of July. Recent gains have brought Sterling to the edge of the 20-day Moving Average on the daily chart below. This also followed positive RSI divergence, showing that downside momentum was fading. The moving average may hold, reinstating the broader downside focus. If not, the 50-day could be tested thereafter. As such, while GBP/USD has been pushing higher recently, further progress is needed to offer a bullish technical bias. Clearing under support exposes the March low of 1.1804. GBP/USD – Daily Chart Chart Created in TradingView Meanwhile, things are also looking slightly optimistic in EUR/GBP for the British Pound. Recently, prices rejected the 0.8658 – 0.8701 resistance zone, as well as the falling range of resistance from February. This is placing the focus back towards a neutral technical bias where the exchange rate fluctuates between resistance (0.8701 – 0.8658) and support (0.8493 – 0.8519). Immediate support is a combination of the 50-day moving average and the 0.861 inflection point. Breaking lower places the focus on the minor 14.6% Fibonacci retracement at 0.8564. Breaking under this exposes the zone of support. Otherwise, a bullish technical bias entails clearing the range of resistance, exposing the 61.8% Fibonacci retracement level. EUR/GBP – Daily Chart Chart Created in TradingView https://www.dailyfx.com/analysis/british-pound-technical-update-sterling-makes-progress-but-broader-bearish-posture-holds-20231010.html

2023-10-10 03:47

S&P 500, SPX, NASDAQ 100, NDX - OUTLOOK: The S&P 500 index and the Nasdaq 100 index have rebounded from key support. Oversold conditions, light positioning, and positive seasonality raise the bar for a material downside from here ahead of the upcoming earnings season. What are the outlook and the key levels to watch in the three US indices? Despite the escalation in geopolitical tensions, US indices have rebounded from key support after an apparent dovish shift by US Federal Reserve officials. Dallas Fed president Lorie Logan and Fed Vice Chair Philip Jefferson highlighted the recent tightening in financial conditions as a result of the sharp rise in yields, lessening the need for further interest rate hikes. Oversold conditions, light positioning, and positive seasonality raise the bar for a material downside in US equities ahead of the upcoming earnings season. At the same time, rising US real yields/cost of borrowing pose constraints on the upside. S&P 500: Holds 200-DMA support The S&P 500 is holding above quite strong converged support on the 200-day moving average and the lower edge of a declining channel from August,a risk highlighted in the previous update. This follows a fall below vital converged support, including the June low of 4325 and the lower edge of the Ichimoku cloud on the daily charts last month, which confirmed that the broader upward pressure had faded. S&P 500 Daily Chart Chart Created by Manish Jaradi Using TradingView. Unless the index is able to clear, at minimum, the early-September high of 4542, the path of least resistance is broadly sideways at best. Ahead of 4542, the index needs to deal with the mid-August low of 4335 followed by the upper edge of the channel. On the downside, any break below the 200-day moving average could expose the downside initially toward the end-April low of 4050. S&P 500 Weekly Chart Chart Created by Manish Jaradi Using TradingView Zooming out from a multi-week perspective, the weakness since August reinforces the broader fatigue, as pointed out in previous updates. See “US Indices Hit a Roadblock After Solid Services Print: S&P 500, Nasdaq,” published September 7; “US Indices Rally Beginning to Crack? S&P 500, Nasdaq Price Setups,” published August 3; “S&P 500, Nasdaq 100 Forecast: Overly Optimistic Sentiment Poses a Minor Setback Risk,” published July 23. Nasdaq 100: Rebounds from Key Support The Nasdaq 100 index’s rise on Monday above minor resistance at last week’s high of 14900 has reduced immediate downside risks. This follows a rebound from crucial converged support: a horizontal trendline from June (at about 14550-14560), the lower edge of a slightly downward-sloping channel from July, and the mid-August low. Nasdaq 100 Daily Chart Chart Created by Manish Jaradi Using TradingView This support has been vital and a break below would trigger a head & shoulders pattern – the left shoulder is at the June high, the head is at the July high, and the right shoulder is at the early-September high. Still, for the bearish pattern to be negated, the index needs to clear significant hurdles at the early-September high of 15618, not too far from the July high of 15932. From a big-picture perspective, as highlighted in arecent update, the momentum on the monthly charts has been feeble compared with the huge rally since late 2022, raising the risk of a gradual weakening, similar to the gradual drift lower in gold since May. For more discussion, see “Is Nasdaq Following Gold’s Footsteps? NDX, XAU/USD Price Setups,” published August 14. https://www.dailyfx.com/news/s-p-500-nasdaq-rebound-from-key-support-how-much-more-upside-20231010.html