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United States Chicago Purchasing Managers’ Index came in at 62.9, above expectations (57) in March

216641   March 31, 2022 22:09   FXStreet   Market News  

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Potential SPR release only highlights the tightness in global inventories — three charts

216635   March 31, 2022 21:51   Forexlive Latest News   Market News  

US President Biden will make a speech about energy today and there are various reports saying he will announce a 1 million barrel per day drawdown in the US strategic petroleum reserve for six months; or a total of 180 million barrels.

The US has been selling 500k bpd already so this is presumably on top of that. There are reports that they’ve lobbied OPEC+ to do more but that hasn’t gotten any traction. Today’s 12-minute long OPEC+ meeting is a strong message that they’re not thinking about adding oil beyond what’s planned.

We don’t know details of the plan yet. Previously the US had executed calendar trades where they sell oil now and buy it back in the futures. Because of the backwardated futures curve, they will actually make money on it. But while that means oil supply will be driven down now, it means more buying later.

Here’s a look at the SPR, where inventories are already drawing down rapidly.

It’s not just the SPR that’s drawing down. Here is a look at US inventories excluding the SPR from Scotia:

If anything, that picture understates the size of the problem because distillate inventories are also very low. Gasoline inventories are in line with the 5-year average but driving miles have picked up rapidly and I’m expecting a blockbuster summer of travel. On top of that, Canadian oil producers have some large maintenance turnarounds scheduled for Q2.

Globally, here is the picture from CIBC:

I still don’t see any signs of a big supply response anywhere. North American drillers can’t source steel or labour. I wrote last month about a contract driller who said it took them six months to add a single crew.

In terms of bigger projects, there has been no movement on offshore or anything outside of Guyana, which has long been in the pipeline. Moreover, investors punish any companies that announce large-scale capex because the stocks remain so cheap against the oil strip.

Ultimately, I think the only way out of this is when oil companies re-rate to something like 8x EV/EBITDA from sub 4x currently. Then buying back shares starts to become less attractive that new capex.

The larger fear is that OPEC+’s spare capacity is less than touted and/or that sanctions materially remove Russia oil. Combine that with the US tank running dry and it’s a recipe for a super-spike in oil.

Even now the market is beginning to shrug off the US SPR talk with WTI up to $103.81 from a low of $100.17.

EUR/GBP Price Analysis: Corrective pullback could be seen as an opportunity for bulls

216634   March 31, 2022 21:49   FXStreet   Market News  

• EUR/GBP retreated sharply from the fresh YTD peak touched earlier this Wednesday.
• The inverted head and shoulders breakout supports prospects for some dip-buying.
• Sustained break below 0.8400 is needed to negate the near-term positive outlook.

The EUR/GBP cross witnessed an intraday turnaround on Thursday and retreated around 60-65 pips from the fresh YTD peak – levels just above the 0.8500 psychological mark. The cross, for now, seems to have snapped three successive days of the winning streak and was seen trading around mid-0.8400s during the second half of the European session.

The British pound’s relative outperformance followed the release of a better-than-expected UK GDP print, which showed that the economy expanded by 1.3% in A4 2021 as against the 1% estimated. On the other hand, the shared currency stalled its recent bullish run amid fading hopes of diplomacy in Ukraine, which revived fears about the economic fallout from the crisis.

From a technical perspective, the strong move up witnessed since the beginning of this week confirmed a bullish breakout through a resistance marked by the neckline of an inverted head and shoulders pattern. A subsequent move beyond the very important 200-day SMA further added credence to the constructive set-up and supports prospects for the emergence of some dip-buying.

Hence, any further decline could be seen as an opportunity for bullish traders and is more likely to find decent support near the 0.8400 mark. The said handle should act as strong base for the EUR/GBP cross, which if broken decisively might negate the bullish outlook. The corrective slide could further get extended towards the next relevant support near the 0.8335 region.

On the flip side, the 0.8500-0.8510 region now seems to act as an immediate hurdle. This is followed by a downward sloping trend-line extending from April 2021, around the 0.8535-0.8540 zone, which if cleared would set the stage for additional gains. The momentum could then allow the EUR/GBP cross to aim back to reclaim the 0.8600 round-figure mark.

EUR/GBP daily chart

Technical levels to watch

Western Official: Don’t see signs of a serious attempt to find a compromise in Russo-Ukraine peace talks

216633   March 31, 2022 21:45   FXStreet   Market News  

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German Economy Minister: On gas payments, will not be blackmailed by Russia’s Putin

216632   March 31, 2022 21:45   FXStreet   Market News  

German Economy Minister Robert Habeck said in a speech in Berlin on Thursday that, regarding gas payments, Germany will not be blackmailed by Russian President Vladimir Putin and reiterated that gas payments will be made in euros. Putin had earlier announced that payments for gas must be made in roubles as of 1 April. 

French Finance Minister Bruno Le Maire, speaking alongside Habeck, said that France and Germany are preparing for a possible scenario that Russian gas flows are halted and that both countries are prepared for anything Putin might decide on gas. We are totally determined to protect households from the fallout of the current energy crisis, Le Maire noted. 

US stocks trade lower for the second consecutive day

216631   March 31, 2022 21:40   Forexlive Latest News   Market News  

The major US stock  indices  are trading lower at the start of the US trading session. The declines are around -0.2% to -0.3%.

A snapshot of the market currently shows:

• Dow industrial average up -107.43 points or -0.30% at 35121.39
• S&P index -8.47 points or -0.18% at 4593.99
• NASDAQ index -37.17 points or -0.26% at 14405.10
• Russell 2000 is up 1.32 points or 0.06% at 2092.39

The month and the quarter end today. The US stocks other worst quarter in two years, but the stocks on track for the first positive month of 2022.

In other markets:

• Spot gold is trading up $7.64 or 0.4% at $1940.24
• Spot silver is up $0.17 or 0.72% the $25.04
• WTI crude oil is trading down four dollars at $103.75
• Bitcoin is trading at $47,000 which is down marginally on the day

In the US debt market, yields are near unchanged:

• two year 2.312%, unchanged
• 10 year 2.334%, -1.8 basis points
• 30 year 2.461%, -1.7 basis points

AUD/USD dips back under 0.7500, remains well within recent ranges as focus turns to US NFP

216630   March 31, 2022 21:40   FXStreet   Market News  

• AUD/USD dipped back under 0.7500 but remains well within this week’s ranges as focus shifts to Friday’s US jobs data.
• The Aussie remains resilient against the backdrop of “structurally” higher commodity prices and expectations for a hawkish RBA policy shift.

AUD/USD dipped back to the south of the 0.7500 level on Thursday, though remains robustly supported near the big figure and well within this week’s approximate 0.7460-0.7540ish ranges. The pair was little moved by the latest batch of US data which saw inflation (according to the Core PCE Price Index) rise again in February and further evidence of a robust labour market one day ahead of the release of the official US jobs report. Despite the data and Fed rhetoric this week supporting the Fed’s recent hawkish shift in stance this week, month/quarter-end selling means the buck has had a tough time.

As a result, AUD/USD has been able to hold near the 0.7500 level this week, with the short-term bulls eyeing a test of Q4 2021 highs in the 0.7560 area. The Australian economy’s geographical removal from the war in Ukraine and positive exposure to the resultant sharp recent rise in commodity prices has been a key tailwind for the Aussie as of late, analysts argued. “If we are right the war leads to a structural increase in energy prices, there is more upside to AUD this year,” said currency strategists at CBA. “We expect AUD/USD will soon break above its resistance near $0.7516 and lift higher to $0.7673,” they continued.

Such a move may have to wait until after Friday’s official US jobs report, with trading conditions ahead of this key data release normally non-committal. In the meantime, recent strong Australian data should keep the pair support above this week’s mid-0.7400 lows. For reference, new homes building approvals surging a massive 43.5% MoM in February, more than recovering January’s 27.1% MoM drop, while data showed job vacancies rose 6.9% in the quarter to February to hit a record 423,500. Recent data underpins expectations that RBA will soon catch up with many of its other G10 central bank peers by announcing a hawkish policy shift. 

AAVE price doubled with the launch of Aave v3

216629   March 31, 2022 21:40   FXStreet   Market News  

• AAVE price has posted 43% gains over the past week as the protocol expanded to support six different blockchains in DeFi. 
• The non-custodial liquidity protocol offers investors the opportunity to lend, borrow or stake their assets and earn yield from their holdings. 
• Analysts are bullish on AAVE price, predicting the next higher high above $250 in the token. 

AAVE price is set to continue its uptrend as the protocol expands to six different blockchains in the DeFi ecosystem. Proponents believe AAVE adoption could climb higher with the latest update. 

AAVE price ready to climb higher 

With the launch of AAVE V3, there is a rapid expansion of the DeFi protocol’s ecosystem. The development team has improved the project’s fundamentals, and the price of the non-custodial liquidity project has climbed in response. 

The latest update puts AAVE at the centre of the DeFi ecosystem as it matures and new protocols build on the network. As a blue-chip project, AAVE has witnessed a rise in its adoption, seeing greater numbers of users and on-chain activity. Users can lend, borrow and stake their assets to earn yield from their AAVE holdings. 

AAVE price has doubled since March 15, and trade volume witnessed a massive spike of 442%. 

The protocol upgraded its DeFi capabilities and made its network accessible to a large number of users through the launch of six blockchains. 

AAVE V3 was proposed on November 21, boosting the efficiency of the token and elevating user experience in the DeFi market. Users can create “aTokens” or AAVE tokens to create a deposit, created on one chain and burnt on another. 

Users can perform yield arbitrage and exchange assets seamlessly between blockchains. 

Analysts have evaluated the AAVE price trend which has witnessed a rally to $250. @venturefounder believes the real battle is between $250 to $300, the next higher high for the token. 

EUR/USD Price Analysis: Downside pressure alleviated above 1.1250

216628   March 31, 2022 21:29   FXStreet   Market News  

• EUR/USD drifts lower following new tops around 1.1180.
• The 8-month resistance line emerges as the next hurdle of note.

EUR/USD corrects lower after reaching new 4-week tops in the 1.1180/85 band on Thursday.

That said, immediately to the upside comes the temporary resistance at the 55-day SMA, today at 1.1198 ahead of the 1.1250 region, where the 100-day SMA and the 8-month line coincide. Beyond this area, the selling bias is expected to subside and allow for extra gains in the short-term horizon.

The medium-term negative outlook for EUR/USD is expected to remain unchanged while below the key 200-day SMA, today at 1.1488.

EUR/USD daily chart

Gold Price Forecast: Safe-haven flows are the name of the game for XAU/USD – TDS

216627   March 31, 2022 21:26   FXStreet   Market News  

The ongoing geopolitical and macroeconomic instability is driving safe-haven fund flows into gold. Economists at TD Securities expect the yellow metal enjoy further upside amid this backdrop.

Hawkish Fed backdrop still poses downside risks

“So long as material progress on ceasefire talks and de-escalation remains elusive, haven flows are likely to keep the yellow metal propped up against an increasingly hawkish Fed backdrop.”

“The 2y-10y curve flirting with inversion has further fueled talk of recession on the horizon, offering another positive dynamic for the gold market.”

“Rates markets are readying for the Fed to deliver a hawkish surprise to markets. On this front, with markets only pricing in roughly a 73% chance of a 50bp move in May, there is still room for the market to price in the full move that we are expecting, which could increase macro outflow pressures for precious metals markets.” 

Russia’s Putin to halt gas payments if buyers don’t pay in roubles, including relating to active contracts

216626   March 31, 2022 21:26   FXStreet   Market News  

Putin signs decree demanding ruble-payment for gas. Payments to start tomorrow

216624   March 31, 2022 21:17   Forexlive Latest News   Market News  

Putin wasn’t bluffing. He said that the taps will be turned off for those who don’t make the payments in rubles. He didn’t specify that they would be cut off immediately but said that if payments aren’t made, they will stop existing contracts.

Yesterday, there were Russian reports saying this would be phased in. His comments suggest otherwise but I’ll wait for the fine print.

This is bullish for European natural gas prices.