US Futures Mixed as Oil Hits Six Month High

It’s been quite a mixed start to the week for the markets, with Asia offering little direction overnight having recovered late on following a tough start, Europe coming under pressure early in the session and U.S. futures pointing slightly higher.

Today’s moves actually reflect quite well the lack of direction we have in the markets at the moment. Most equity indices have been range-bound for much of this month, potentially due to a lack of major catalysts to provide the spark for the next move. While today is looking a little light on that front, there are a number of possible catalysts to come this week which could provide the spark, none more so than the FOMC minutes on Wednesday.

The rhetoric from a number of Federal Reserve officials recently has been that June is a “live” meeting and so another rate hike is possible and yet the markets simply aren’t buying it. It will be interesting to see whether the minutes from the last meeting support this idea or put the final nail in the coffin. With the implied probability of a hike in June now down to 4%, it would appear investors are anticipating the latter.

Fed Rate Prob

Source – CME Group FedWatch Tool

The Brexit debate will also continue in the background which could impact sentiment in Europe. Boris Johnson, arguably the most important member of the “Leave” camp, stepped up his criticism of the E.U. over the weekend following a very quiet start to the campaign. I imagine we’re going to hear a lot more from both camps on this issue in the coming weeks and with the polls so close, it could get very interesting.

One area we are finding support today is in oil, with both Brent and WTI crude higher by around 2%. Oil has also been range-bound for a while now but it seems that a suggestion by Goldman Sachs that the oil market is no longer oversupplied due to a number of supply disruptions and bankruptcies in the U.S., has propelled prices to a six month high. The next key level for Brent will be around $51-51.50, while $48.50 in WTI may offer some resistance.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.