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US Dollar, USD,Fed, Crude Oil, UAE, WTI, Brent – Talking Points
- Dollar weakens as rising interest rates raise recession fears
Crude gets another boost on apparent lack of capacity
Risk sentiment fluctuates back and forth, will the dollar rebound?The dollar has slipped in recent sessions amid speculation about the extent and depth of the U.S. slowdown due to rising interest rates.
The Fed has made it clear that inflation is the focus of future policy, and Treasury yields have responded in the same way, resuming their upward trend overnight. The yield on the benchmark 10-year Treasury note was near 3.18% after falling several basis points in Asian trade.
Higher yields sent gold below $1,830 an ounce, but crude oil prices were higher after supply concerns resurfaced ahead of tomorrow’s OPEC meeting.
Restrictions on oil production were exacerbated by comments from the United Arab Emirates (UAE) Energy Minister Suhail al-Mazrouei, which has restricted oil production due to political unrest in Ecuador and Libya.
Their oil production is close to capacity, he said. The UAE is seen by the market as one of the few countries that could fill the void left by the Russian sanctions.
The WTI futures contract touched just 111 barrels in Asia today, while the Brent contract was above 116 barrels.
Commodities markets focused on a sell-off in base metals, with copper and tin continuing to slide on global growth concerns.
Asia-Pacific shares were combined with slightly stronger Australian and Japanese indices, while China and Hong Kong were slightly weaker.
The euro held on to yesterday’s gains, but the oil-backed Norwegian crown continued to post the biggest gains in what has been a relatively quiet day for the currency so far.
The ECB Forum begins today, with remarks by San Francisco Federal Reserve Chair Mary Daly later. The US will see some consumer confidence data.
The full economic calendar can be viewed here.
USD (DXY) INDEX Technical Analysis
Despite the recent pullback, the U.S. dollar (DXY) index remains well above an uptrend line that has been steepening since March.
Resistance is likely at the recent high of 105.79 or near the 10-day simple moving average (SMA).
On the downside, support could be found at the pullback low at 103.42, or the uptrend line currently being dissected at 102.20.
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