US Crude Oil, ASX 200 Analysis: Oil prices fall with price outlook cut

Market summary

• US 1-year consumer inflation expectations fell to 4.1%, bolstering bets that the Fed will hold rates
• The Nasdaq 100 rose early 2% to a fresh 14-month high ahead of today’s US inflation report, and bets that the Fed will hold interest rates tomorrow
• The DAX gapped above 16k and headed for the resistance zone near last week’s high, yet seems set to remain in its box ahead of this week’s FOMC and ECB meetings which makes it ideal for range-traders over the near-term
• AUD and EUR were the strongest FX majors, CHF and GBP were the weakest
• AUD/USD rose to a 22-day high and appears determined to break a 4-month losing streak, having risen over 4.8% since the May low
• Yet a bearish hammer on the daily chart warns of a hesitancy to continue higher ahead of US CPI and Fed meeting, and rang-trading seems feasible today without a fresh catalyst
• Oil prices fell over 4% as Goldman Sachs cuts its crude price forecast for a third time in six months
• New Zealand credit card spending contracted -1.7% m/m in May, and April’s figure was reduced to 0.4% (from 0.7%) as high interest rates continue to weigh on demand
• Japan’s producer prices deflated by -0.7% in May, faster than the -0.2% expected

Read our weekly reports:

• The Week Ahead: US Inflation, FOMC, ECB and BOJ meetings in focus
• S&P 500, Gold Analysis: Commitment of traders report (COT)

Events in focus (AEDT):

• 08:45 – NZ migration and visitors (strong visitors is inflationary, and not desired by the RBNZ)
• 10:30 – Australian consumer sentiment by Westpac
• 11:30 – Australian business confidence by NAB
• 22:30 – US consumer prices (a key report ahead of this week’s FOMC meeting)

ASX 200 at a glance:

• Traders return to their desks after the 3-day weekend in Australia
• A small bullish candle formed on Friday
• The ASX has continued to lag behind Us and Japanese stocks over the past three months
• Tech stocks could outperform today on the back of the Nasdaq rally
• SPI future are effectively flat from around Friday’s close

WTI crude oil 1-hour chart:

Whilst WTI crude trades within a clear downtrend on the 1-hour chart, there are some signs that it may be due a bounce at a minimum from around current levels. First off, we’ve not seen any form of a retracement since it first tried to break below $70, but a bullish hammer formed on high volume, and prices have since failed to break its low (also on high volume) and momentum is trying to turn higher. There’s a lot of traders caught short from around $67.47, and they may want to cover should prices move too far above $67.50 or $68 and head for $69.00 or $70 as part of a healthy retracement. Beyond that is likely down to tonight’s US inflation report and FOMC meeting.

Asia Data Calendar (AEDT):

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge