Crude oil rallies ahead of OPEC+ meeting and inventory data

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The Canadian dollar moved sideways after the Bank of Canada’s latest interest rate decision. The bank decided to raise interest rates by 0.50%. Push the overnight rate to 1.50%. Additionally, Tiff Macklem warned that more rate hikes were needed to curb soaring inflation. It was more hawkish than most analysts expected. The decision came a day after the country released mixed GDP figures. The overall consumer price index hit a multi-decade high of 6.8%.

The US dollar index rose slightly after mixed economic data from the United States. According to the Institute of Supply Management, the manufacturing PMI fell from 55.4 in April to 56.1 in May. This increase was better than the median estimate of 54.5. Data from S&P showed that the manufacturing PMI fell from 59.2 to 57.0. There are signs that the manufacturing sector is doing well as supply chain issues improve. Additional data revealed that the number of job vacancies fell from 11.85 million to 11.4 million. Later today, the US will release the latest initial jobless claims while ADP releases its private payroll numbers.

The price of crude oil rose slightly after Shanghai began ending its two-month shutdowns. Brent rose to $117 while Western Texas Intermediate rose to $116. At the same time, the price of natural gas continued to rise. In a statement, authorities in Shanghai said they had ended its lockdowns even as they set tougher measures like testing. This is seen as a positive thing for oil prices since China is the biggest consumer. Later today, the Energy Information Administration will release the latest inventory data. Analysts expect data to show inventories fell 0.067 million barrels. At the same time, the OPEC+ cartel will hold its monthly meeting.

XBRUSD

XBRUSD formed a breakout and retest after dropping to support at 114.20. This was an important level as it was along the upper side of the ascending channel shown in white. It was also above the important resistance at 114.17. The price is also slightly above the 50-day moving average while the MACD has moved above the neutral level. Therefore, the pair will likely continue higher as the bulls target the key resistance at 120.

EURUSD

EURUSD slipped after the Fed’s hawkish tone from Mary Daly. In an interview with CNBC, she said she supports moving interest rates to neutral this year. It fell to a low of 1.0625, which was the lowest level since May 24. The pair broke below the 25-day moving average while the Relative Strength Index (RSI) and MACD declined. Therefore, its outlook is bearish, with the next support at 1.0578, which is the 38.2% Fibonacci retracement point.

USDJPY

USDJPY continued to rally amid a stronger US Dollar. It hit a high of 130.10, which was the highest level since May 11. The pair has jumped sharply from its May low of 126.15. It managed to move above the important resistance level at 129.43 as the relative strength index and momentum oscillators rose. Therefore, the pair will likely continue higher as the bulls target the key resistance at 131.

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