Sterling retreats from three-year high ahead of Bailey speech
The price of crude oil rose to the highest level in almost three years after strong global manufacturing PMIs and an optimistic report by OPEC. The price of West Texas Intermediate (WTI) rose to $68.4 while Brent rose to $70.73. In a report, OPEC said that the glut that arose during the coronavirus pandemic has almost finished while global demand is set to rise. The cartel and its allies are expected to ratify their scheduled supply increase later today. Oil prices also rose after a delay in the US and Iran negotiations. A deal between the two sides will bring more than 1 million barrels of oil to the market. Further, data by Markit showed that the manufacturing sector continued to do well in May.
The British pound rose to the highest level in more than three years as the market remained optimistic about the country’s recovery. Data published by Nationwide and Markit revealed that the country’s economy is doing relatively well. For example, the house price index rose by 1.8% in May, better than the expected 0.8%. This growth led to a year-on-year increase of 10.9%, which was better than the median estimate of 9.2%. According to Markit, the manufacturing PMI rose to 65.6 in May. After rising to its highest level in three years, the currency then retreated as investors waited for an upcoming speech by Andrew Bailey. The speech will come a week after a BOE member hinted that the bank will hike interest rates in 2022.
The euro was little changed after the relatively positive economic data from Europe. In a report, the German statistics agency said that the unemployment rate remained unchanged at 6.0% in May. In total, the number of unemployed people in Germany declined to more than 2.73 million. These numbers will likely improve as the country’s economy reopens. Further data showed that the country’s manufacturing PMI was at 64.4 in May. In France and Italy, the PMI came in at 59.4 and 62.3, respectively. These numbers are signs that the European economy is experiencing a strong recovery. The services PMIs will come later this week.
The EURUSD pair was little changed after the strong economic data from Europe. The pair is trading at 1.2225, which is slightly below the weekly high of 1.2240. On the 30-minute chart, the pair is above the neckline of the inverted head and shoulders pattern at 1.2215. It is also slightly above the 25-day moving average while the relative strength index (RSI) has fallen to 47. Therefore, the outlook for the pair is neutral, with the key support and resistance being at 1.2210 and 1.2240, respectively.
The USDCHF pair was little changed today. It is trading at 0.8990, which is slightly above yesterday’s low of 0.8978. The pair is also along the 25-day moving average and is slightly below the Ichimoku cloud. The signal and histogram of the MACD are also slightly below the neutral level while the Market Facilitation Index (MFI) has continued to fall. Therefore, the pair will likely remain around this level as investors wait for the next catalyst.
The BTCUSD continued to consolidate after the recent volatility. On the four-hour chart, the pair has formed a bearish triangle pattern and is currently slightly below the 23.6% Fibonacci retracement level. The pair is also oscillating along the 25-day and 15-day exponential moving averages (EMA). The pair will likely break out lower in the near term.