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U.S. crude stocks up, output at highest level since April 2020

 

 

“Do not be embarrassed by your failures, learn from them and start again.” — Richard Branson

 

 

HEADLINES

 

  • Dollar falls on cooler-than-expected U.S. inflation data
  • Gold ticks up in choppy trade as investors assess U.S. inflation data
  • Oil up, rebounds on renewed gasoline demand, weak dollar
  • S&P, Nasdaq jump 2% as cooling inflation eases rate hike bets
  • U.S. crude stocks up, output at highest level since April 2020
  • GBP/USD: Pound remains vulnerable, could break under 1.20 again – Rabobank
  • AUDUSD Near Term: Upside favored

 

 

Dollar falls on cooler-than-expected U.S. inflation data

 

The dollar fell broadly on Wednesday, with its biggest decline against the yen since March 2020, following a cooler-than-expected inflation report for July that raised expectations of a less aggressive rate hike cycle than previously anticipated from the U.S. Federal Reserve.

U.S. consumer prices did not rise in July as the cost of gasoline plunged, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years.

Economists polled by Reuters had forecast a 0.2% rise on the heels of a roughly 20% drop in the cost of gasoline.

The dollar index , which measures the currency's value against a basket of currencies, was down 1.448% at 104.81 at 11:30 a.m. Eastern time (1530 GMT).

 

 

COMMODITIES

 

Gold ticks up in choppy trade as investors assess U.S. inflation data

 

Gold prices edged up in choppy trading on Wednesday after relatively tame U.S. inflation readings prompted bets that the Federal Reserve may not opt for aggressive rate hikes.

Spot gold rose 0.2% to $1,797.29 per ounce by 10:19 ET (1419 GMT), but gave up some gains after rising to its highest since July 5 after the CPI data.

U.S. gold futures were little changed at $1,813.00.

 

 

ENERGY

 

Oil up, rebounds on renewed gasoline demand, weak dollar

 

Oil prices rose on Wednesday, rebounding from losses early in the session on lift from encouraging figures on U.S. gasoline demand and as a lower-than-expected U.S. inflation figure drove investors into riskier assets.

Brent crude futures rose68 cents, or 0.7%, to $96.99 a barrel as of 12:46 p.m. EST (1746 GMT). U.S. West Texas Intermediate crude futures gained83 cents, or 0.9%, to $91.33 .

U.S. crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels. However, U.S. gasoline stocks fell sharply as implied demand rose after weeks of lackluster activity during what is supposed to be peak summer driving season.

 

 

STOCKS

 

S&P, Nasdaq jump 2% as cooling inflation eases rate hike bets

 

Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on another super-sized rate hike by the U.S. Federal Reserve.

U.S. consumer prices were unchanged in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for weary Americans who have watched prices climb over the past two years.

Traders are now pricing in a 41.5% chance of a 75-basis-point increase in fund rates at the Fed's next meeting in September, compared with 67.5% before the data.

 

U.S. crude stocks up, output at the highest level since April 2020

 

U.S. crude stocks rose in the most recent week while U.S. production hit its highest level since April 2020, a signal that high prices are driving further output in the world's largest oil producer.

Gasoline stocks fell sharply and demand rebounded modestly, though the last four weeks of gasoline consumption has been softer than in 2021, the Energy Information Administration said on Wednesday.

Crude inventories (USOILC=ECI) rose by 5.5 million barrels in the week to August 5 to 432 million barrels, compared with expectations in a Reuters poll for a 73,000-barrel rise.

 

 

ANALYSIS

 

GBP/USD: Pound remains vulnerable, could break under 1.20 again – Rabobank 

 

“Last week the market was taken by surprise by the candid tone adopted by the BoE in its warnings about the UK economic outlook.  The Bank forecast that the economy would fall into a 15 month recession starting in Q4 this year and that GDP would drop a little over 2 ppt from peak to trough in a downturn similar to the one experienced in the early 1990s.  While it was a surprise to hear the Bank speak in such frank terms, the fact that the UK growth outlook is poor was not a total shock.”

“Although fresh UK economic data has been limited so far this week, there has been plenty of evidence illustrating the precarious position of the UK economy. Bloomberg news is reporting that the UK government is preparing for the possibility of energy blackouts in the forthcoming winter. Additionally, estimates are circulating that average household annual energy bills could rise to over £4000 in the new year.  Since the average salary for full-time UK workers is around £38,400, this could have a devasting impact on consumer demand.”

“The USD has softened in the wake of today’s US CPI inflation report.  However, we retain the view that the pound remains vulnerable vs. the USD and see risk of another break below the 1.20 level on a 1 to 3 month view.  In our view, GBP has a better chance of holding its ground vs. the EUR into the winter, given the energy crisis currently facing the Eurozone.”

 

 

CHART

 

AUDUSD Near Term: Upside favored

 

Technical View: Long position above 0.6945. Target 0.6995. Conversely, break below 0.6945, to open 0.6925.

Comments: The pair remains supported. Further advance favored.

 

 

Source: Trading Central 

 

 

CALENDAR

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

 

SOURCES 

 

https://www.reuters.com/markets/europe/nervous-calm-dollar-braces-inflation-test-2022-08-10/
https://www.reuters.com/article/global-precious/precious-gold-ticks-up-in-choppy-trade-as-investors-assess-u-s-inflation-data-idUSL4N2ZM330
https://www.reuters.com/business/energy/oil-prices-dip-after-industry-data-shows-us-crude-stockpiles-rising-2022-08-10/
https://www.reuters.com/markets/europe/futures-tick-higher-investors-brace-inflation-data-2022-08-10/
https://www.reuters.com/business/energy/us-crude-stocks-up-output-highest-level-since-april-2020-2022-08-10/
https://www.fxstreet.com/news/gbp-usd-pound-remains-vulnerable-could-break-under-120-again-rabobank-202208101602