US Crude has posted slight gains on Tuesday, reversing the losses which marked the Monday session. US crude futures is trading at $47.24 per barrel in the North American session. Brent Crude is trading at $47.80, as the Brent premium has narrowed to $0.56. On the release front, US Final GDP posted a gain of 1.1%, within expectations. The CB Consumer Confidence report improved to 98.0 points, well above the estimate.
In the US, GDP was revised upwards in the first quarter. Final GDP for the first quarter posted a gain of 1.1%, above the estimate of 1.0%. This reading was stronger than the Preliminary GDP reading of 0.8%. Although the upward revision was welcome news, the revised GDP report marked the weakest gain in a year. On the consumer front, CB Consumer Confidence impressed by climbing to 98.0 points, easily beating the forecast of 93.2 points. Is US consumer confidence strengthening? It’s not clear, as last week’s UoM Consumer Sentiment report dropped to 93.4 points and missed expectations. Consumer confidence is closely linked to consumer spending, and we’ll get a look at Personal Spending on Wednesday.
With the aftershocks of the Brexit vote continuing to reverberate in the Britain and Europe, political leaders must now pick up the pieces and deal with the radical new landscape, which was unthinkable just a few months ago – that of a European Union without Britain. The historic decision raises many questions and has resulted in political and financial instability in Europe and the UK, and wiped out a staggering $3 trillion from global stock markets. The British pound has tumbled about 11 percent since the vote, and the Australian dollar took a hit as well, as investors dumped risky assets in favor of safe-haven assets like gold and the Japanese yen. Chancellor of the Exchequer George Osborne and Bank of England Governor Mark Charney have sought to reassure the markets and the public that the situation is under control, but is it? The political picture is fluid, with Prime Minister Cameron resigning, the Labor Party in turmoil, and general elections likely later in the year. On the financial front, the pound and the markets have taken a beating, and London’s position as a world financial center has been shaken. The uncertainty is not going to disappear anytime soon, so traders should be prepared for further volatility in the currency markets.
British Prime Minister Cameron is meeting with his EU colleagues in Brussels for a 2-day summit, and already there are signs that this divorce between Britain and the EU could be rancorous and messy. Cameron said on Monday that his successor would be the one to initiate the exit mechanism, and other British politicians have said there is no rush to leave. However, European lawmakers, furious with the decision, have called on Britain to leave as soon as possible. Britain may have voted “Leave”, but clearly the timing and the type of exit plan remain unclear. The future framework of political and economic relations between the UK and the continent will have to be negotiated, and we will see plenty of uncertainty and perhaps fireworks in the coming months.
Tuesday (June 28)
- 8:30 US Final GDP. Estimate 1.0%. Actual 1.1%
- 8:30 US Final GDP Price Index. Estimate 0.6%. Actual 0.4%
- 9:00 US S&P/CS Composite-20 HPI. Estimate 5.5%. Actual 5.4%
- 10:00 US CB Consumer Confidence. Estimate 93.2. Actual 98.0
- 10:00 US Richmond Manufacturing Index. Estimate 2 points. Actual -7 points
- 19:00 FOMC Member Jerome Powell Speaks
*Key events are in bold
*All release times are EDT
WTI/USD for Tuesday, June 28, 2016
WTI/USD June 28 at 10:50 EDT
Open: 46.73 Low: 46.82 High: 47.81 Close: 47.24
- WTI/USD posted small gains in the Asian and European sessions. The pair has lost ground in North American trade
- 46.49 is a weak support line
- There is resistance at 50.13
Further levels in both directions:
- Below: 46.49, 43.45, 39.32 and 35.25
- Above: 50.13, 53.50 and 56.79
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