WTI/USD – Crude at $40 Level, US Services, Job Reports Next

US crude is trading just above the $40 level. In the North American session, WTI/USD futures are trading at $40.12. Brent crude is trading at $41.71, as the Brent premium stands at $1.59. On the release front, there are no key events on the schedule. Personal Spending posted a gain of 0.4%, edging above the estimate of 0.3%. On Wednesday, the US will release two key events – ISM Non-Manufacturing PMI and ADP Nonfarm Employment Change.

With the Federal Reserve opting for the sidelines last week, the markets have circled September and December as possible dates for a rate hike. However, the economy has posted some weak numbers, underlined by a very soft Preliminary GDP report, which gained just 1.2%, compared to the estimate of 2.6%. The Fed will want to see stronger economic data before pressing the rate trigger. On Sunday, FOMC William Dudley, a close ally of Janet Yellen, said that the Brexit fallout posed a risk to the US economy and urged the Fed to proceed with caution before raising interest rates. The US will release wage growth and nonfarm payrolls later in the week, and these key employment numbers will be carefully monitored by the Fed as it mulls over a possible rate hike. If these releases do not meet expectations, the likelihood a move in September will sharply decrease. Employment releases will be in the spotlight for the remainder of the week, starting with ADP Nonfarm Payrolls on Wednesday.

The manufacturing sector has been a soft spot in a strong US economy, and the week started with lukewarm manufacturing numbers. ISM Manufacturing PMI and Manufacturing Prices pointed to slight expansion but both indicators fell short of their estimates. An ongoing global economic slump has taken its toll on the manufacturing sectors of developed economies, and the US is no exception. As well, Construction Prices disappointed with a drop of 0.6%, its fourth decline in the past five months.

WTI/USD Fundamentals

Tuesday (August 2)

  • 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
  • 8:30 US Personal Spending. Estimate 0.3%. Actual 0.4%
  • 8:30 US Personal Income. Estimate 0.3%. Actual 0.2%
  • All Day – US Total Vehicle Sales. Estimate 17.1M

Upcoming Key Events

Wednesday (August 3)

  • 8:15 ADP Non-Farm Employment Change. Estimate 171K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.0

*Key events are in bold

*All release times are EDT

WTI/USD for Tuesday, August 2, 2016

WTI/USD August 2 at 11:30 EDT

Open: 41.36 High: 41.88 Low: 39.87 Close: 40.12

WTI USD Technical

S3 S2 S1 R1 R2 R3
30.55 35.25 39.32 43.45 46.69 50.13
  • WTI/USD was flat in the Asian session. The pair posted strong gains in the European session but has reversed directions and posted strong losses in North American trade
  • 39.32 is providing weak support
  • There is resistance at 43.45

Further levels in both directions:

  • Below: 39.32, 35.25 and 30.55
  • Above: 43.45, 46.69, 50.13 and 53.50

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.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.