Stocks rebound and BoC rate decision due
Oil => The commodity steadies at $114.00
S&P500 => The stock rises towards 4140
USD/CAD => The pair rises from a 5-week low
Oil volatility continues
Oil prices have been on a rollercoaster ride over the past 36 hours.
Oil prices jumped to a two-month high after EU leaders approved the banning of around 90% of Russian oil imports. The deal was watered down from the original proposal in order for Hungary to get onboard but is still expected to have an impact. However, oil prices then tumbled to settle 2.5% lower on reports that some OPEC+ members were considering expelling Russia from the group and rising oil output. OPEC+ will meet to discuss production levels on Thursday.
Today the price is rising as Shanghai ends its two-month lockdown, lifting the demand outlook. EIA crude stockpile data is due.
Where next for WTI oil prices?
WTI crude oil trades above its rising trendline dating back to late December and above its 20 & 50 sna.
The 20 sma has crossed above the 50 sma in a bullish signal, and the RSI supports more upside while it remains out of overbought territory. Buyers need to retake resistance at 119.23, yesterday’s high, in order to continue the bullish trend towards 1251.40, the 9 March high.
On the flip side, a break below 114.00 exposes the 20 sma at 109.30, with a break below here negating the near-term uptrend and opening the door to the 50 sma at 105.50.
S&P500 looks to data drop
The S&P500 fell 0.6% in the previous session.
However, it picked up off session lows with the help of consumer discretionary stocks after data revealed that consumer sentiment was holding up better than expected. Consumer confidence fell in May to a three-month low, but this was still a smaller fall than expected, helping stocks off low.
Today futures are rising and there is plenty of data for the market to focus on with the release of ISM manufacturing data, the manufacturing PMI, and JOLTS jobs openings ahead of Friday’s all-important NFP. The PMI data is expected to show a slight slowdown in activity, while the jobs data is expected to show that there are still a record number of vacancies, highlighting a tight labor market. Upbeat data could help boost the market.
| US consumer confidence
US ISM manufacturing |
Actual: 106.4 (2.2)
Expected: 54.5 (1) |
Previous: 108.6
Previous: 55.5 |
BoC to hike by 50 or 75 basis points?
USD/CAD fell 0.1% yesterday for a fifth straight session as the loonie gained ground despite disappointing GDP data and falling oil prices.
Economic growth slowed in the first three months of the year owing to a fall in oil-related exports. However, consumer demand remained strong, which will be a positive sign for the BoC as they meet to discuss monetary policy. The BoC raised rates by 50- basis points in the last meeting, the largest hike in 22 years.
For today’s announcement, a 50 basis point rate hike has been priced in by the market, but there is a possibility that the central bank will raise interest rates by 75 basis points to tame 30-year high inflation. A hawkish sounding BoC could boost the loonie.
| Cad. GDP QoQ Q1 annualized | Actual: 3.1% (3.5%) | Previous: 6.6% |
Support can be found at 1.2590 (3 March low) and 1.25 (round number).
Resistance for the pair can be seen at 1.2710 (50 sma) and 1.28 (round number).
