The US dollar index is developing a “bearish” rally and is trading at 101.50. Market participants are analyzing the latest data on the US labor market, which disappointed traders and showed that the sector is cooling down. Under these conditions, US Federal Reserve officials will need additional statistics to understand whether it is necessary to continue raising the rate or it is better to take a break. The June inflation data on Wednesday may be the key trigger for the regulator. The consumer price index is expected to fall from 4% to 3.1% in annual terms, which may finally convince the Fed that the July rate hike will be the last in the current cycle of monetary tightening. Against this backdrop, the decline of the dollar may continue.
SELL STOP 101.20/TP 100.50/SL 101.50
USD/CAD
The USD/CAD pair is trading at 1.3260. The Canadian dollar is supported by a strong labor market report. Thus, Canada added 60 thousand jobs in June, exceeding the experts’ forecast of 20 thousand. Analysts expect that the improvement in the labor market will stimulate the growth of consumer activity and accelerate inflation, which still exceeds the central bank’s target.
The next meeting of the Bank of Canada will take place on Wednesday. According to forecasts, the regulator will again raise the rate by 0.25%, which may provide additional support to the Canadian currency. Given the above, the pair maintains downside potential.
SELL STOP 1.3230/TP 1.3150/SL 1.3260
BRENT
Brent crude oil renews local highs. Prices continue to be supported by the decision of Saudi Arabia to extend its voluntary output cut of 1 million barrels a day until the end of August. Russia in the same period intends to reduce oil supplies by 500 thousand barrels a day. Traders also await data on the US oil stockpiles. The American Petroleum Institute is expected to report a $2.5 million barrels drop in inventories tonight, which could be another catalyst for the price growth. In addition, oil buyers also benefit from the weakening of the US dollar. If sentiment does not change, Brent could hit $80 a barrel.
BUY STOP 78.50/TP 80.00/SL 78.00
