Tension in global markets continues to increase. Events such as the escalation of the trade crisis between America and China, the growth of tension with Europe and the announcement of the introduction of 5% duties on all Mexican imports from June 10, with the prospect of raising them in the coming months to 25% indicates that investors are unlikely to hope for change for the better in the near foreseeable future.
Trump does not seem to calm down until he breaks all the old trade unions and agreements and does not finish off new ones with shifted preferences in favor of Washington. On this wave, the quotes of “black gold” collapsed amid the continued growth in oil production in America on Thursday for the second time this month. This really contributed to their increase and stimulated oil production in the United States at the same time, which successfully occupied opening niches.
This week, Russian Finance Minister Siluanov has already expressed concern about this fact, which may be the reason for Russia’s withdrawal from the OPEC + agreement to reduce oil production. By the way, it is quite likely that the collapse of quotations was caused not only by a drop in hopes that Washington and Beijing will agree on trade, as well as an increase in shale and common oil production in the United States in the foreseeable future, but also a likely change in Russia’s position.
The fact that tension is growing clearly demonstrates the growing demand for government debt bonds of economically developed countries, including the USA. Yield benchmark 10-year Treasuries continues to “fall” down. Over the last week, it fell from 2.431% to 2.178%. The yen and the Swiss franc also receive support for the safe haven currency and the US dollar also tries to keep up with them.
Today, markets will focus on the publication of baseline personal consumption index (RFE) data in the United States and the values for income and expenditure of Americans. If the indicators show a positive trend, it will noticeably lower the expectations that the Fed may in the near future go to lower interest rates. These data can be a catalyst for a new wave of growth of the dollar, reducing the demand for risky assets.
Forecast of the day:
Oil prices confidently entered the bear phase. A decrease in WTI quotes below 55.80 could lead to their further fall to 54.50.
The USD/CAD pair is above the support level of 1.3500. It can be adjusted in anticipation of the publication of data from the United States. If they turn out to be no worse than forecasts and the pair holds above this level, there is a chance that its growth will resume by 1.3600.