US dollar loses ground against the commodity currencies

The US dollar has been under some broad pressure since New York rolled in. There’s a bid in bonds and S&P 500 futures are up 20 points so the backdrop is conducive to USD selling.

Taking advantage are the commodity currencies with both AUD and CAD at session highs.

AUD/USD is up 43 pips to start the new month. I noted earlier this week that June is a positive seasonal month for the Australian dollar. The gains today to 0.7219 mark the best levels since May 4.

AUDUSD daily chart June 1

CAD is benefiting from a rebound in oil above $116. Crude was knocked through $114 yesterday on a report of fracturing or a potential removal of Russia from OPEC+. Today a report said OPEC’s technical committee had trimmed the 2022 oil market surplus forecast, which could be a precursor to pumping more. Though with a surplus forecast, you’d still expect them to show restraint.

In any case, the loonie is benefiting now but it’s all about the Bank of Canada decision at 10 am ET.

Eurostoxx futures +0.3% in early European trading

  • German DAX futures +0.4%
  • UK FTSE futures +0.2%

Risk sentiment is keeping steadier as we get into European morning trade, after a bit of a sluggish showing by equities yesterday. The recent bounce in stocks may have some added breathing room but the storm clouds are still staying the course. Elsewhere, S&P 500 futures are up 0.2%, Nasdaq futures flat, and Dow futures up 0.4% currently.

OPEC meeting preview – “most OPEC producers are struggling to raise output”

  • reports that OPEC is exploring the idea of exempting Russia from its oil-production deal. This could lead to other member such as Saudi Arabia and UAE pumping more crude oil.
  • The oil producing alliance is due to meet on Thursday to discuss its production agreement that has stabilised oil markets over the past couple of years.
  • But the fact remains that most OPEC producers are struggling to raise output. Despite record high prices, many producers have been unable to invest in new fields or even maintain maintenance. Case in point is Libya, which is facing further disruption to output as its Sarir-Hariga pipeline suffers leaks, leading to losses of more than 300kb/d.
russia uae

US stocks end an up and down session with losses on the day

The major US  indices  had an up and down trading day. The major indices are closing lower on the day. The markets were influenced by profit taking after the run higher last week that saw the major indices up greater than 6%. Admittedly, those oversized gains came after 7 straight weeks of declines for the S&P and Nasdaq and 8 straight weeks for the Dow. A gain was due in an oversold market.

This week will be challenged by the run up to the US jobs report on Friday. A lot of times, traders/investors want to see what that story tells.

What is more relevant currently is weaker data is better as it has the benefit of potentially slowing the Fed hikes, and with a little luck, slowing the tightness in the economy that is leading to higher inflation, and tighter employment.

The Dow closed lower for the first time after 6 straight days of gains. The Nasdaq and S&P snapped 3 days of gains.

The final number are showing:

  • Dow fell -222.84 points or -0.67% at 32990.11
  • S&P index fell 26.07 points or -0.63% at 4132.16
  • NASDAQ index fell -49.73 points or -0.41% 12081.40
  • Russell 2000 fell 23.85 points or -1.26% at 1864.04


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