Recession fears linger

Oil => The index falls below $104

EUR/USD => The pair rises above 1.0550

FedEx  => The stock trades -10% this year


Oil extends losses

Oil prices tumbled 3% and are falling a further 2% in early trade on Thursday, trading below $104 per barrel.

Oil dropped sharply on the news that President Biden would temporarily suspend the 18.4 cents federal gasoline tax, potentially stimulating demand and as recession fears hammered the commodity and other risk assets lower. Investors continue to fret over what aggressive central bank monetary tightening will do to economic growth, particularly in the US, the world’s largest oil consumer.

 

Where next for the oil price?

WTI oil fell away from resistance at 122 reached on June 14, falling below its 50 sma, the rising trendline, and the 100 sma.

This was the first time the price fell below 100 sma since December. The RSI is bearish, suggesting further losses. Sellers will look for a move below 101.40, yesterday’s low, to open the door to 100.00 and 97.40. On the upside, buyers will look for a move over 109.50, the 50 sma, and the rising trendline resistance. A move over here opens the door to 111.00, yesterday’s high and June 2 low.

 

FedEx Q4 earnings preview.

FedEx is due to report, and Wall Street is expecting the global logistics giant to report EPS$6.88 on revenue of $24.47 billion.

This compares to EPS of $5.01 and revenue of $22.60 billion in the same quarter last year. The data will reveal how FedEx has coped with a challenging backdrop of surging fuel costs and rising labour costs, which negatively impacted results in the previous quarter. The results come after FedEx’s share price jumped 13% last week following a dividend hike and after adding three new members to its executive board. These will also be the first results under new CEO Raj Subramaniam, who replaced founder Fred Smith.

 

EUR/USD rises ahead of PMI data

EUR/USD rose 0.4% yesterday, paring earlier losses after cautious comments from Federal Reserve Jerome Powell on the economic outlook weighed on the USD.

The head of the Fed said that a recession in the US was certainly a possibility and that the Fed would continue acting to rein in inflation. However, he wasn’t specific about whether the Fed would lift rates by 75 or 50 basis points, which helped ease aggressive Fed hiking bets.

Today the pair is rising for a fourth straight session as attention now turns to eurozone and US composite PMI data, which is considered a good gauge for business activity. Eurozone composite PMI is expected to ease slightly but remains above 50, the level that separates expansion from contraction. In the US, business activity growth is expected to accelerate slightly.

US Composite PMI

EZ Composite PMI

Expected: 53.7 (0.1)

Expected: 54 (0.8)

Previous: 53.6

Previous: 54.8

 

Support can be found at 1.0470 (yesterday’s low) and 1.0360 (June low).

Resistance for the pair can be seen at 1.06 (50 sma) and 1.0640 (May 5 high)

 



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