Market Close out the Month on the Up
US indices closed out a good month with another positive day yesterday, the Dow gained 0.28%, the S&P 0.15% and the Nasdaq added a further 0.21%. It was a relatively quiet day for markets ahead of what promises to be another busy week, FX pairs traded in familiar ranges with the exception of the JPY which lost further ground against the dollar and other majors as it found its level after last week’s post BOJ volatility. US treasury yields slipped slightly as traders eye up key data later in the week and Oil posted further gains trading up to levels not seen since April, Brent now trading above $85/b and WTI just under $82/b.
Black Gold Drives Higher – Brent Rises 12.7% in July
Oil has seen strong gains over the last few weeks as the bull’s favourite duo of tightening supply and increasing demand combine to lift the black gold to multi-month highs. With Saudi Arabia expected to extend its output cut of 1 million barrels per day for another month and oil inventories dropping across the globe – especially in the US – the supply side is lining up nicely for further gains than we have already seen, Brent notably up 12.7% in July. WTI also looks set to increase from a technical perspective and has pushed higher after breaking through the 200-day moving average a week ago. The next target is April highs just under $84/b but a push through there could see it extend up to resistance levels just under $95/b.
Volatility Set to Heat Up as Event Risk Increases
After a one-day breather yesterday, traders are preparing to kick off the month with a busy day ahead as the even calendar heats up. The Asian market will first turn its attention to China with the release of the latest Caixin Manufacturing PMI date, before the focus drops back down to the antipodes and the latest rate update from the Reserve Bank of Australia. The European session sees a raft of Manufacturing PMI numbers and employment updates from across the continent but the focus will turn swiftly to US data on the New York open. The ISM Manufacturing PMI numbers are due out alongside the latest JOLTS Job openings data and investors looking for more evidence of a soft landing will be hoping for strong prints once again.
