EURUSD trades at lowest level since April to start the trading week. What next?

Falls below the low from last week in the process.

The EURUSD as fall below the low from last week and traded to the lowest level since April 5 to start the trading week.  Flows into the relative safety of the US dollar is driving the pair to the downside after an up and down session on Friday.
Falls below the low from last week in the process.
Technically, the price remain below its 100 hour moving average (blue line) at the Asian session highs and got the ball rolling to the downside in the European session.  The pair did reach below the low from last week at 1.17708 to a low of 1.17674, bounced to 1.17807 before running to a new low for the day at 1.17631.
The price has rebounded again and currently trades at 1.17762. That takes the price back above the lows from last week (at 1.17708).
Dip buyers who want to stick their toe in the water would not want to see a move back above the 1.17809 (was the low going back to July 7) – and stay above that level – if the buyers are to take more control. Alternatively, staying below that level in the short term today would keep the sellers firmly in control.

Bitcoin slumps to the lowest levels of the month

Bitcoin has held up better than I would have expected

Given the vast ‘risk off’ trade in markets, I would have expected to wake up to heavier bitcoin selling today. Until the past few minutes, that hadn’t happened but it has quickly fallen $500 and is trading at $30,775, which is the lowest since June 22.
Bitcoin has held up better than I would have expected

This is not a good looking chart but that’s something that everyone knows

Oil slides further by nearly 3% to below $70

Oil tumbles further as the risk sentiment keeps more defensive

WTI D1 19-07
Not a good look for risk trades so far in European trading as sentiment continues to erode further, with oil suffering a further drop to start the new week.
Price is now dropping below $70 in a fall by close to 3%, as a stronger dollar (softer risk mood) weighs further following the drop after OPEC+ formalised a deal over the weekend.
I’m still siding with a more bullish long-term outlook for oil but the latest pullback is not one that should be underestimated.
With risk trades potentially pulling back further, we could see a sharper drop if there is a daily break below $70 before longs may feel more comfortable coming back in closer to the 100-day moving average (red line), now seen @ $66.20.

Credit Suisse raise their oil price forecasts

On Brent, forecast to approximately $70/bbl in 2021 (from their previous projection of approximately $66.50/bbl)

  • $69/bbl in 2022 (from $68/bbl)
  • ‘long term’ forecast to $62/bbl (from $60/bbl)
On WTI oil
  • approx $67/bbl in 2021, from circa $62/bbl
  • $66/bbl in 2022 (from $63/bbl)
  • long term $59/bbl (from $55/bbl)
In very brief (from a longer note) CS say:
  • Bottom Line: We are raising our Brent and WTI price forecasts since supply/demand fundamentals continue to improve
  • While demand continues to surprise to the upside. OPEC + and US E&Ps have shown strong discipline.
  • As global crude oil stocks draw in 2H21, we see support of higher crude oil prices

PBOC sets USD/ CNY reference rate for today at 6.4700 (vs. yesterday at 6.4705)

The People’s Bank of China set the onshore yuan (CNY) reference rate for the trading session ahead.

    • USD/CNY is permitted to trade plus or minus 2% from this daily reference rate.
    • CNH is the offshore yuan. USD/CNH has no restrictions on its trading range.


  • The previous close was 6.4786
  • Reuters estimate was 6.44710 (A rate that’s significantly stronger or weaker than expected is typically considered a signal from the PBOC).


PBOC injects 10bn yuan via 7-day reverse repos

  • 10bn RRs mature today
  • thus a net natural day for open market operations

How 6 countries are faring after easing covid-19 rules

The lay of the land in the post (?) covid world

Netherlands cases
Markets have been acting like covid-19 is over for the past year but the price action this month suggests some second thoughts. As one person put it, “the basketball game looked over but covid hit a miracle 3-pointer at the buzzer to send it to overtime.”
BBC look at six countries who eased restrictions illustrates the challenge.
1) Israel began lifting restrictions back in February and 56% of the country is fully vaccinated but in mid-June after the country was fully reopened trouble began to start. The delta variant led to climbing new cases, which hit 1118 on Friday. The country has reinstated mask mandates and introduced harsher visitor quarantines. The latest talk is that vaccine passports may be reintroduced.
2) Netherlands – the picture tells the story after restrictions were lifted at the end of June. There is a bit of good news in the past week with cases appearing to plateau, but only after curbs were reintroduced.
Mask off3) South Korea – This was the poster-child for how to handle the virus in an open democracy but after some relaxation in curbs in mid-June, it’s now facing its worst outbreak yet with around 1500 daily cases.
4) Australia – Cracks continue to form in the Australian dam. Victoria has entered its fifth lockdown and the effort to completely suppress the virus is beginning to look futile. The problem is that Australia’s success with low cases has spawned vaccine hesitancy.  With AUD/USD at the lowest since December, the market has certainly noticed.
5) USA
USA covid moronsCases are ticking up everywhere, particularly in areas with the least amount of vaccines administered. One spot that’s telling might be San Francisco. It’s the most-vaccinated city in the country but cases are rising there all the same and public health officials on Friday recommended masks in all indoor public places.
6) Sweden – This continues to offer an interesting counter-point. Cases have remained low despite re-opening and the delta variant is responsible for 60% of cases. It will be a spot to watch with first dose vaccinations above 70% and second doses at 45% and rising quickly.
Hospitals:  The good news in all these places is that serious cases remain low. To be clear, they’re rising but they’re at low and completely manageable. That needs to be monitored but so far, the vaccines appear to be doing a great job of protecting the vulnerable.
I continue to believe that the ongoing trade in markets is more about growth/value trades being reoriented in a low-conviction market but I’m open to the idea that it’s covid — something I wrote about on Friday. I think now is a good time to keep a close eye on the virus and variants, particularly these countries. Early trading this week is slightly tilted towards risk aversion once again.
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