Many market participants were taken off guard by the Tuesday wave of US dollar purchasing, which drove a broad array of asset markets to monthly and yearly maxima.
Increased concerns that the greatest economy in the world may be on the verge of, or perhaps in, a recession as the downturn of economic growth was what initially triggered the relentless USD buying.
The Federal Reserve’s late arrival to the party reaction of raising interest rates at a staggering rate and magnitude to control inflation has put a damper on economic growth. The GDP of the United States for the first quarter shrank by 1.6 % on a yearly basis, and according to the highly monitored Atlanta Fed’s GDP Now index, a 2.1% decrease was seen in the GDP figures of the second quarter in the United States. If so, a technical recession could already be emerging in the United States.
The city of Xi’an is the most recent subject of a lockdown in China, which continues to adhere to a zero-covid policy. The city has been without electricity for seven days as a result of the outbreak of a deadly Omicron strain.
After trading in an erratic 10% zone on Tuesday, the value of Brent Crude is steady. Oil fell considerably later in the day, reaching a low of $100.30/bbl., prior to actually making a minor comeback after starting the day around its high. A confluence of previous swing lows forms a band of support around $95.60/bbl and $100.80/bbl, which should withstand any additional short-term selling. Longer-term, though, any more indications of a weakening global economy might cause oil to go below $90 per barrel which has not been the case since the beginning of the year.
8.48% of traders are net-long. While the number of traders who are net-long has increased by 38.60% and 39.12 from July 5 and the week before, correspondingly, the number of traders who are net-short has decreased by 41.64 % and 44.17%, with respect to the aforementioned timeframe.