Oil => The index drops to 78.15
BTC/USD => The cryptocurrency falls below 19k
GBP/USD => The pound falls to 1.05
Oil extends losses from last week
Oil prices plunged to an 8-month low after losing 7.5% last week. Oil fell sharply as the USD strengthened and as recession fears grew. The hawkish FOMC lifted the USD and raised the prospect of more rate hikes. Other central banks across the globe also hiked interest rates increasing the possibility of slowing global growth, which hurts the oil demand outlook. The Chinese economic backdrop with COVID lockdowns and slowing growth add to the demand destruction story, dragging oil lower. Meanwhile, the stronger USD makes oil more expensive for buyers with other currencies, again weighing on demand. While there is no high impacting data for oil today, across the week, Chinese manufacturing PMIs and US GDP data could influence the price.
Where next for oil prices?
Oil has been trending lower since late June, forming a series of lower highs and lower lows. Oil broke below support at 80.00 round number, which, combined with the bearish RSI, suggests more losses could be on the cards. Sellers will need to break below 78.00, the falling trendline support, and Friday’s low, to extend the bearish trend towards 74.90, the November 19 low, and 70.00, the psychological level. Meanwhile, buyers will be looking for a rise over 80.00 round number and 85.00, the August low, to negate the near-term downtrend.
BTC/USD steadies after risk aversion last week
Bitcoin and other cryptocurrencies traded in the red across the week. BTC/USD traded mainly below 19k, where it stays as the new week begins, down around 1% across the past 24 hours. BTCUSD traded under pressure last week after central banks across the globe, including the Fed, hiked interest rates, which, coupled with deteriorating economic indicators, fueled fears of recession. BTC/USD tracked US indices lower, with the Nasdaq shedding over 5% for a second straight week with investors shunning riskier assets. Looking ahead, US durable goods, consumer confidence, and new home sales will be in focus this week. BTC/USD bulls defend successfully defend 18k over the coming days; a breakout to the upside towards 20k could be on the cards.
GBP/USD falls to an all-time low
GBP/USD tumbled 3.6% on Friday, booking losses of 4.5% across last week. The pair is extending the selloff as the new week begins falling a further 3% to an all-time low of 1.0350. The USD rallied on expectations that the Fed would continue hiking rates aggressively after a 75-basis point hike on Wednesday and on safe-haven flows as recession fears rise. The pound, meanwhile, tanked lower after Chancellor Kwasi Kwarteng unveiled the largest tax cuts in 50 years. However, the unfunded measures raise fears over surging government borrowing, sending gilt yields shooting higher. As the new week begins, follow-through selling drives the pair lower, with talk about pound dollar parity rising and possible intervention from the BoE.
Support can be found at 1.05 (round number) and 1.0350 (all-time low).
Resistance for the pair can be seen at 1.06 (round number) and 1.07 (20 sma).