US oil output to rise to record high in July but growth narrowing -EIA

“It is not our abilities that show what we truly are. It is our choices.” —Dumbledore 

HEADLINES

• Sterling prepped for rate decisions, shakes off UK political ructions
• Gold eases as dollar firms at start of busy Fed week
• US oil output to rise to record high in July but growth narrowing -EIA
• Wall St climbs with focus on inflation data, Fed decision
• Treasury yields are mixed as investors anticipate key inflation data, Fed policy meeting
• USD/CAD could rebound unless a break below the low 1.33 zone materializes soon – Scotiabank 
• GBPJPY Near Term: Downside favored

Sterling prepped for rate decisions, shakes off UK political ructions

Sterling held mostly steady on Monday, ahead of a week packed with central bank decisions and key economic data, starting with a read on the UK jobs market that could be pivotal in setting expectations for what the Bank of England may do next week.

The currency market showed little reaction to developments on the political front in the UK, after the surprise resignation from parliament of former Conservative Prime Minister Boris Johnson and two fellow lawmakers over the weekend.

Volatility across the broader financial market was subdued on Monday, as traders prepared for a flurry of central-bank decisions on interest rates, starting with the U.S. Federal Reserve on Wednesday.

COMMODITIES

Gold eases as dollar firms at start of busy Fed week

Gold prices dipped on Monday as the dollar and bond yields firmed, while traders braced for a busy week of key U.S. inflation prints and major central bank policy meetings, with all eyes on the Federal Reserve.

The dollar index edged up 0.12%, making gold more expensive for overseas buyers, while a rise in U.S. Treasury yields made zero-yielding bullion less attractive.

ENERGY

US oil output to rise to record high in July but growth narrowing -EIA

U.S. oil output from top shale-producing regions is due to rise to the highest on record in July, but the size of the increase is expected to be the smallest since December, U.S. Energy Information Administration data showed on Monday.

U.S. oil output is expected to rise to 9.38 million barrels per day (bpd) in July, EIA data showed. Output is due to rise by about 0.1% versus the previous month, which would be the smallest monthly gain since production was seen falling in December, the data showed.

Crude output in the Permian Basin in Texas and New Mexico, the biggest U.S. shale oil basin, is expected to rise by 1,000 bpd to a record-high 5.76 million bpd. That would be the smallest monthly increase for the region since February.

STOCKS

Wall St climbs with focus on inflation data, Fed decision

Wall Street's main indexes rose on Monday, extending a recent rally, as investors awaited inflation data and the Federal Reserve's interest rate decision this week, while Oracle hit a record high ahead of quarterly results later in the day.

The U.S. Labor Department's consumer price index reading on Tuesday, first day of the Fed's two-day meeting, is expected to show inflation cooled slightly in May but core prices likely remained sticky.

The benchmark S&P 500 (.SPX) notched gains for a fourth straight week on Friday, building on a 20% rise from its October 2022 lows, heralding the start of a new bull market as defined by some market participants.

Treasury yields are mixed as investors anticipate key inflation data, Fed policy meeting

U.S. Treasury yields were mixed Monday as investors braced themselves for the latest inflation data and the Federal Reserve’s next policy meeting and interest rate decision, which are expected this week.

Investors braced themselves for a week of key economic data and the next highly anticipated interest rate decision from the Fed. May’s consumer price index report is due Tuesday, when the Fed will also begin its latest policy meeting.

That meeting will conclude Wednesday with a decision on whether the central bank will pause or continue its rate-hiking campaign, which began in March 2022 with the goal of cooling the economy. After the Fed’s last meeting, officials signaled that rate increases could be paused soon.

ANALYSIS

USD/CAD could rebound unless a break below the low 1.33 zone materializes soon – Scotiabank 

“The technical backdrop is solidly USD-bearish, spot is trading below all major short, medium and long-term MA signals and trend momentum is bearish across intraday, daily and weekly DMI studies. That is usually a pretty strong signal for losses to extend. But the spot is getting caught up by this band of support in the low 1.33 zone and the (near-term) risk is growing that unless we see a break lower soon, the USD could rebound. 

Runs of successive daily losses (or gains, for that matter) in spot rarely run deep into double digits.”

CHART

GBPJPY Near Term: Downside favored

Technical View: Short position below 176.05. Target 174.2. Conversely, break above 176.05, to open 176.89.

Comments: The pair remains under pressure. Further weakness favored.

CALENDAR

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/markets/currencies/sterling-prepped-rate-decisions-shakes-off-uk-political-ructions-2023-06-12/
https://www.cnbc.com/2023/06/12/gold-eases-on-stronger-dollar-focus-on-central-bank-meetings.html
https://www.reuters.com/markets/commodities/us-oil-output-rise-record-high-july-growth-narrowing-eia-2023-06-12/
https://www.reuters.com/markets/us/futures-rise-focus-shifts-inflation-data-fed-meet-2023-06-12/
https://www.cnbc.com/2023/06/12/us-treasurys-investors-anticipate-inflation-data-fed-meeting-.html
https://www.fxstreet.com/news/usd-cad-could-rebound-unless-a-break-below-the-low-133-zone-materialezes-soon-scotiabank-202306121245