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The forex markets are a bit mixed today while trading is subdued. New Zealand Dollar stays as the strongest on RBNZ rate hike expectations. Swiss Franc and Euro are following, primarily thanks to recovery against Sterling. Yen is currently the weakest one for the day, followed by the Pound and then Canadian. But the weekly picture is unchanged, with Sterling and Dollar as strongest, Euro and Aussie as weakest.

Technically, while Euro recovers against Yen, Sterling, Aussie and Canadian, it's not totally out of the woods against Dollar and Swiss Franc. We'd firstly watch 1.1262 temporary low in EUR/USD and 1.0505 key support in EUR/CHF. Firm break there could indicate resumption of broad based selloff in Euro. On the other hand, break of 1.1384 minor resistance in EUR/USD and 1.0596 minor resistance in EUR/CHF would argue that Euro has found a bottom already, at least for the near term. More short covering would likely follow.

In Europe, at the time of writing, FTSE is down -0.23%. DAX is down -0.07%. CAC is up 0.10%. Germany 10-year yield is down -0.0216 at -0.265. Earlier in Asia, Nikkei dropped -0.30%. Hong Kong HSI dropped -1.29%. China Shanghai SSE dropped -0.47%. Singapore Strait Times rose 0.13%. Japan 10-year JGB yield rose 0.0092 to 0.084.

US initial jobless claims dropped to 268k, continuing claims dropped to 2.08m

US initial jobless claims dropped -1k to 268 in the week ending November 13, above expectation of 260k. Four-week moving average of initial claims dropped -6k to 253k. Both were the lowest since March 14, 2020.

Continuing claims dropped -129k to 2080k, lowest since March 14, 2020. Four-week moving average of continuing claims dropped -100k to 2157k, lowest since March 21, 2020.

Also released, Philly Fed manufacturing survey jumped to 39 in November, up from 23.8, well above expectation of 21.5.

OECD: France GDP to grow 6.8% in 2021, 4.2% in 2022

OECD projects a strong 6.8% growth in France GDP in 2021, followed by 4.2% in 2022. Private consumption is forecast to grow 4.8% in 2021, and a further 6.8% in 2022. Unemployment is expected to drop to 7.8% this year and then 7.6% next. CPI is expected to be at 1.9% this year, then slow to 1.7% next.

"France's response to the COVID-19 crisis has been swift and effective, enabling it to emerge from the health crisis with jobs and household incomes well protected and its economic capacity largely preserved," OECD Secretary-General Mathias Cormann said. "A rigorous implementation of the government's Recovery and Investment Plans will help to turn the rebound into lasting sustained growth, building a greener, more digital and more resilient economy."

Panetta: ECB to develop digital euro prototype in 2023

ECB Executive Board Member Fabio Panetta said in a speech, "Over the next two years we will investigate the key issues related to the design and distribution of a digital euro".

The digital euro will be designed to be an "efficient means of payment", but also to "preserve financial stability". He added, "we will need to strike a balance between maximising its appeal as a means of exchange and limiting its use as a form of investment."

The Eurosystem High-Level Task Force on Central Bank Digital Currency is working to identify "use cases and design options". After this phase, ECB will move on to examining "technological solutions. Panetta said, "we expect to narrow down the design-related decisions by the beginning of 2023 and develop a prototype in the following months."

RBNZ survey: Four rate hikes over next seven meetings

In the latest RBNZ survey for Q4, 2-year ahead inflation expectations rose from 2.27% to 2.96%, highest since June 2011. 5-year inflation inflation expectation rose from 2.03 to 2.17%, highest since September 2017.

Currently, the OCR is standing at 0.50%, after a rate hike of 25bps in October 6. Survey respondents expect OCR to rise further to 0.75% by the end of the current quarter. Mean estimate for OCR one year ahead was 1.53%, translating to four 25bps hike over the next seven RBNZ meetings. Two year-head expectations stands at 1.83%, with more respondents expecting OCR to be either at 1.50% or 2.0)% by the end of September 2023.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1281; (P) 1.1306; (R1) 1.1349; More...

Intraday bias in EUR/USD remains neutral for the moment, with focus staying on 1.1289 long term fibonacci level. Sustained break there will carry larger bearish implication, and extend the fall from 1.2348 to 161.8% projection of 1.1908 to 1.1523 from 1.1691 at 1.1068. On the upside, above 1.1384 indicate short term bottoming and turn bias back to the upside for stronger rebound.

In the bigger picture, there are various ways of interpreting the fall from 1.2348 (2021 high). It could be a correction to rise from 1.0635 (2020 low), the fourth leg of a sideway pattern from 1.0339 (2017 low), or resuming long term down trend. In any case, outlook will now stay bearish as long as 1.1703 support turned resistance holds. Sustained break of 61.8% retracement of 1.0635 to 1.2348 at 1.1289 would pave the way back to 1.0635.

Economic Indicators Update

US initial jobless claims dropped -1k to 268 in the week ending November 13, above expectation of 260k. Four-week moving average of initial claims dropped -6k to 253k. Both were the lowest since March 14, 2020.

Continuing claims dropped -129k to 2080k, lowest since March 14, 2020. Four-week moving average of continuing claims dropped -100k to 2157k, lowest since March 21, 2020.

Full release here.

Markets are consolidating as the USD Index saw some limited upside, even vs JPY as yields turned slightly lower in recent sessions, but this may again change later today during FOMC speeches. From an EW perspective, we see USD Index in a corrective pullback; ideally, that's going to be a three-wave set-back within wave four that can stabilize at 95.00-95.25.

EURUSD is coming much lower with an extended and accelerating price action away from 1.1607 that looks like wave 3) based on characteristics rather than wave C). As such, in the 4-hour chart, we think there will be more weakness after a pullback in wave 4), ideally down to 1.1180 area for wave D) on a daily target that can belong to a triangle, while the price is below 1.1512 invalidation level.

EUR/USD 4h Elliott Wave analysis

The New Zealand dollar has posted strong gains on Thursday. NZD/USD is currently trading at 0.7041, up 0.60% on the day.

Inflation Expectations accelerates

New Zealand release inflation expectations and the indicator climbed for a sixth successive session. The indicator is carefully monitored since inflation expectations can manifest into actual inflation. The third-quarter release came in at 2.96%, up from 2.27%. The strong reading provided a boost for the New Zealand dollar and has strengthened the likelihood of the RBNZ raising rates at its policy meeting next week. The RBNZ was one of the first central banks to raise rates since the pandemic started, with a 25-bps hike in October. The central bank plans a series of hikes going into 2022, and the main question facing the markets is will the bank raise rates by 25 bps or show an aggressive hand with a 50-bps jump.

In the US, inflation continues to climb, but higher prices didn’t put a damper on consumer spending, as retail sales climbed 1.7% in October, up from 0.7% beforehand. Core retail sales showed an identical gain, up from 0.8%. There is a growing concern in the markets that the Fed will have to respond to the surge in inflation, as the argument that inflation is transient is looking out of touch with the realities on the ground. If the Fed trims its purchases, we could see some volatility in the financial markets.

The White House is feeling the pain of inflation, as US voters could punish the Democrats in the 2022 mid-term election over higher prices. President Joe Biden also has to make a key decision shortly as to who will head the Federal Reserve. Jerome Powell and Fed member Lael Brainard are the favorites, and Brainard is considered more dovish, which could mean that interest rates stay lower for a longer period, which would be bullish for equities and bearish for the US dollar.

NZD/USD Technical

• There is resistance at 0.7146 and 0.7252
• 0.6966 is a weak support line. Below, there is support at 0.6892

OECD projects a strong 6.8% growth in France GDP in 2021, followed by 4.2% in 2022. Private consumption is forecast to grow 4.8% in 2021, and a further 6.8% in 2022. Unemployment is expected to drop to 7.8% this year and then 7.6% next. CPI is expected to be at 1.9% this year, then slow to 1.7% next.

"France's response to the COVID-19 crisis has been swift and effective, enabling it to emerge from the health crisis with jobs and household incomes well protected and its economic capacity largely preserved," OECD Secretary-General Mathias Cormann said. "A rigorous implementation of the government's Recovery and Investment Plans will help to turn the rebound into lasting sustained growth, building a greener, more digital and more resilient economy."

Full release here.

Notes/Observations

• Emerging central bank rate decisions in focus (Turkey expected to cut while South Africa looks to embark on tightening).

Asia

• New Zealand Q4 Inflation Expectation Survey (2-year outlook): 3.0% v 2.3% prior [10-year high].
• Japan economic stimulus spending said to require ¥55.7T [~¥78.9T when including spending by the private sector]; confirms the package will be approved by Cabinet on Fri. (Nov 19th).
• Japan LDP Official Motegi stated that an extra Budget of >¥30T and would send a big message.

Europe

• EU and UK said to be near an agreement on Northern Ireland medical supplies. EU Sefcovic said to be more upbeat on securing a deal and said to have informed member states to dial down threats of a trade war if Article 16 was triggered.

Americas

• Fed's Evans (dove, voter) noted that it would take until mid-2022 to complete the Fed’s wind-down of its bond buying program. High fuel prices were hitting household budgets and would be a headwind; On the other hand the stock market was high and financial conditions were good. Would not be surprised to see unemployment fall to 4.5% by year end.
• Fed's Waller (hawk, voter) had no objections to the idea of banks issuing both payment stablecoins and bank deposits, given the economic similarities between them.
• Fitch affirmed Mexico sovereign rating at BBB-; Outlook Stable.

Energy

• US said to be considering asking other countries to coordinate a release of oil reserves. US said to raise the matter with Japan/China/South Korea and India.
• China National Food and Strategic Reserves Admin (SRB) stated that was working on release of crude reserves. Declined to comment on US request for China to release reserves to help ease global prices.
• South Korea and Japan also confirmed they received US request to release oil reserves.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.04% at 489.78, FTSE -0.11% at 7,283.35, DAX -0.06% 16,240.94, CAC-40 +0.14% at 7,167.14, IBEX-35 +0.13% at 9,009.45, FTSE MIB -0.06% at 27,808.00, SMI -0.09% at 12,589.19, S&P 500 Futures +0.27%].
• Market Focal Points/Key Themes: European indices open generally mixed but took on a positive biase as the session progressed; better performing sectors include financials and materials; laggard sectors include industrials and real estate; Carlyle and Metro Bank terminate takeover; Recticel sells its bedding business; Cosmo completes takeover of Cassiopea; Playtech confirms has received takeover ofer from JKO Play; earnings expected during the upcoming US session include Macy’s, Coty and Applied Materials.

Equities

• Consumer discretionary: Royal Mail [RMG.UK] +5% (earnings).
• Financials: Metro Bank [MTRO.UK] -18% (terminates talks with Carlyle).
• Healthcare: AstraZeneca [AZN.UK] -1% (additional vaccine trial results).
• Industrials: ThyssenKrupp [TKA.DE] +5% (earnings).
• Technology: Micro Focus International [MCRO.UK] -2% (trading update).

Speakers

• ECB's Centeno (Portugal) reiterated Council stance that pick-up in inflation was seen as a temporary phenomenon.
• ECB’s Panetti (Italy) stated that expected to narrow CBDC design decision by early 2023.
• EU Competition Commissioner Vestager announced the extension of State Aid rules until Jun 2022 (six-month extension).
• Norway Central Bank (Norges) 4Q Household Expectations Survey raised its 12-months inflation expectations from 2.3% to 3.0% and raised the 2-3-year inflation expectations from 3.5% to 3.9%.
• Hungary Central Bank Gov Matolcsy stated that needed to balance growth concerns and debt risks.
• Russia Central Bank (CBR) Gov Nabiullina stated that accelerating inflation was alarming symptom and that food inflation was already in double-digit figures.
• Russia govt spokesperson Peskov stated that Nord Stream 2 fulfilling all bureaucratic requirements to receive German license.
• Philippines Central Bank Policy Statement noted it would prioritize policy support on economy. There did remain risks to monetary settings but would be patience in policy levers to keep economic recovery more sustainable. It did stand ready to respond to 2nd round effects. Inflation expectations were firmly anchored. Economic growth was showing traction but delays in lifting virus curbs and more virulent outbreak could dampen prospects.
• Indonesia Central Bank Policy Statement noted that its rate policy was in-line with efforts to increase growth and support recovery from pandemic.
• China PBoC Gov Yi Gang stated that global economic recovery had slowed since mid-2021 while inflation had sharply increased. Soaring energy prices had led to energy shortages in many countries.
• PBoC Sun Tianq stated that should pay continued attention to existing financial risks.
• US Commerce Sec Raimondo stated that was confident on developing framework with Indo-Pacific partners to strengthen business and workforce.

Currencies/Fixed income

• USD retraced some of its recent gains in a quiet EU session as markets' reassess the divergence of global central banks to rising inflation. The question now was whether the sustainability of the current dollar strength was intact.
• GBP/USD was higher and above the 1.35 level following the hotter CPI data from Wed. Dealers attributed the strength to BOE rate hike bets for Dec.
• The NZD currency (kiwi) was former after central bank survey showed near-term inflation was expected to rise and likely sealed a 25bps hike by the RBNZ next week.
• Focus on emerging market currencies with rate decisions by Turkey and South Africa later today. The TRY currency moved off its recent record lows.

Economic data

• (NL) Netherlands Oct Unemployment Rate: 2.9% v 3.1% prior.
• (EU) EU27 Oct New Car Registrations: -30.3% v -23.1% prior.
• (CH) Swiss Oct Trade Balance (CHF): 5.7B v 5.0B prior; Real Exports M/M: -1.5% v +0.6% prior; Real Imports M/M: -4.4% v -0.8% prior; Watch Exports Y/Y: 12.5% v 16.6% prior.
• (PH) Philippines Central Bank (BSP) left Overnight Borrowing Rate unchanged at 2.00% (as expected).
• (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo unchanged at 3.50% (as expected).
• (CH) Swiss Q3 Industrial Output Y/Y: 8.3% v 16.1% prior; Industry & Construction Output Y/Y: 7.3% v 14.5% prior.
• (SE) Sweden Oct Unemployment Rate: 7.6% v 8.2% prior; Unemployment Rate (seasonally adj): 8.5% v 8.4%e; Trend Unemployment Rate: 8.7% v 8.8% prior.
• (NG) Nigeria Q3 GDP Y/Y: 4.0% v 5.0% prior.

Fixed income issuance

• (IN) India sold total INR240B vs. INR240B indicated in 2031, 2034 and 2061 bonds.
• (ES) Spain Debt Agency (Tesoro) sold total €4.115B vs. €4.0-5.0B indicated range in 2027, 2029 and 2031 SPGB bonds.
• Sold €1.49B in 0.00% Jan 2027 SPGB bonds; Avg yield: -0.114% v -0.089% prior; bid-to-cover: 1.62x v 1.35x prior.
• Sold €865M in 0.60% Oct 2029 SPGB bonds; Avg Yield: 0.178% v 0.279% prior, bid-to-cover: 2.32x v 2.69x prior.
• Sold €1.76B in 0.50% Oct 2031 SPGB bonds; Avg Yield: 0.465% v 0.483% prior; bid-to-cover: 1.40x v 1.32x prior.
• (FR) France Debt Agency (AFT) sold total €7.494B vs. €6.5-7.5B indicated range in 2024 and 2027 bonds (3 tranches).
• Sold €3.047B in 0.00% Mar 2024 Oat; Avg Yield: -0.69% v -0.71% prior; Bid-to-cover: 2.86x v 3.38x prior.
• Sold €2.598B in 0.00% Feb 2027 Oat; Avg Yield: -0.37% v -0.42% prior; bid-to-cover: 2.56x v 2.51x prior.
• Sold €1.849B in 2.75% Oct 2027 Oat; Avg yield: -0.37% v -0.42% prior, Bid-to-cover: 2.92x v 2.39x prior.
• 00 (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month bills; Avg Yield: -0.700% v -0.641% prior; Bid-to-cover: 2.4x v 2.45x prior.

Looking ahead

• (PE) Peru Q3 GDP Y/Y: 10.8%e v 41.9% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
• 05:50 (FR) France Debt Agency (AFT) to sell €1.25-1.75B in inflation-linked 2026, 2028 and 2030 bonds (Oatei).
• 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 100bps to 15.00%.
• 06:00 (RO) Romania to sell 4.85% 2029 Bonds; Avg Yield: %; bid-to-cover: x prior.
• 06:00 (CZ) Czech Republic to sell 1-month Bills; Avg Yield: % v 1.73% prior; Bid-to-cover: x v 4.12x prior.
• 06:30 (CL) Chile Q3 GDP Q/Q: 5.3%e v 1.0% prior; Y/Y: 17.6%e v 18.1% prior.
• 06:30 (CL) Chile Q3 Current Account Balance: No est v -$2.7B prior.
• 06:45 (US) Daily Libor Fixing.
• 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to raise Interest Rate by 25bps to 3.75%.
• 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 12th: No est v $622.1B prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (US) Fed’s Bostic on Regional Outlook.
• 08:30 (US) Nov Philadelphia Fed Business Outlook: 24.0e v 23.8 prior.
• 08:30 (US) Initial Jobless Claims: 260Ke v 267K prior; Continuing Claims: 2.120Me v 2.160M prior.
• 08:30 (CA) Canada Sept Int'l Securities Transactions (CAD): No est v 26.3B prior.
• 08:30 (US) Weekly USDA Net Export Sales.
• 09:30 (US) Fed’s Williams.
• 09:30 (IE) ECB’s Lane (Ireland, chief economist).
• 10:00 (US) Oct Leading Index: 0.8%e v 0.2% prior.
• 10:30 (US) Weekly EIA Natural Gas Inventories.
• 11:00 (US) Nov Kansas City Fed Manufacturing Activity: 28e v 31 prior.
• 13:00 (US) Treasury to sell 10-Year TIPS Reopening.
• 14:00 (US) Fed’s Evans.
• 15:30 (US) Fed's Daly.
• 16:00 (KR) South Korea Oct PPI Y/Y: No est v 7.5% prior.
• 18:30 (JP) Japan Oct National CPI Y/Y: 0.2%e v 0.2% prior; CPI Ex-food (core) Y/Y: 0.1%e v 0.1% prior; CPI Ex-food/energy (core-core) Y/Y:- 0.7%e v -0.5% prior.
• 19:01 (UK) Nov GfK Consumer Confidence: -18e v -17 prior.
• 21:00 (NZ) New Zealand Oct Credit Card Spending M/M: No est v -3.3% prior; Y/Y: No est v -12.9% prior.
• 22:00 (ID) Indonesia Q3 Current Account Balance: $3..2Be v -$2.2B prior.
• 22:30 (JP) Japan to sell 3-Month Bills.

ECB Executive Board Member Fabio Panetta said in a speech, "Over the next two years we will investigate the key issues related to the design and distribution of a digital euro".

The digital euro will be designed to be an "efficient means of payment", but also to "preserve financial stability". He added, "we will need to strike a balance between maximising its appeal as a means of exchange and limiting its use as a form of investment."

The Eurosystem High-Level Task Force on Central Bank Digital Currency is working to identify "use cases and design options". After this phase, ECB will move on to examining "technological solutions. Panetta said, "we expect to narrow down the design-related decisions by the beginning of 2023 and develop a prototype in the following months."

Full speech here.

The Canadian dollar is flat in the European session. Currently, USD/CAD is trading at 1.2603, down 0.01%. On Wednesday, the Canadian dollar fell by 0.40% as USD/CAD pushed into 1.26-territory.

How will BoC deal with surging inflation?

The Federal Reserve and BoE are scrambling to deal with surging inflation, and let’s not leave the Bank of Canada out of that honourable list. October inflation accelerated, as expected. CPI climbed 4.7% y/y, matching the consensus and up from 4.4% in September. Trimmed CPI, which excludes energy, rose 3.3%, matching the gain in September. The headline reading is the highest since 2003, and the markets are watching to see how the BoC reacts. Earlier this week, Governor Tiff Macklem said that it would not raise the benchmark interest rate until “economic slack is absorbed”, which he said had not yet occurred but was getting closer. Macklem sought to reassure the markets that inflation will be kept under control, but with the latest CPI report hitting an 18-year high, investors can be forgiven for not sharing Macklem’s confidence.

We continue to see a disconnect between BoC guidance and market expectations. The BoC has signalled that it may raise rates around mid-2022, but the markets have priced in a hike for March of next year. Something will have to give, and with inflation showing no signs of easing, the central bank may have to bring forward its timeline for a rate hike, which would support the Canadian dollar.

Ahead of the December policy meeting, the Fed will have had a chance to review key inflation data, including the October PCE index, the Fed’s favorite inflation gauge, as well as the November CPI report. These releases could have a significant impact on what moves if any the Fed announces at the December meeting.

USD/CAD Technical

• There is support at 1.2423. Below, there is support at 1.2296
• There is resistance at 1.2641, followed by 1.2732

• Wall Street slips amid faster tapering fears as dollar rally pauses for breath
• Euro steadier, kiwi surges on rising inflation expectations but Turkish lira crumbles
• Oil slide deepens after US asks other countries to release strategic reserves

Stocks hit by inflation woes

Jitters about how further spikes in inflation might begin to hurt corporate earnings as well as spur the Federal Reserve to hasten its tapering timetable weighed on Wall Street on Wednesday. With signs that consumer spending in US is ramping up and simmering price pressures far from cooling down, investors are nervous the Fed will take its foot off the gas a little faster than it currently plans to.

The S&P 500 and Nasdaq Composite closed about 0.3% lower yesterday, while the Dow Jones fell by a steeper 0.6%. The losses came despite an impressive set of earnings by America’s retail giants this week. There is a growing concern that the ongoing broad-based supply constraints and soaring input costs will dampen earnings in the upcoming quarters even as many businesses appear to have grappled well with those challenges in Q3.

However, there’s been no hint from the Fed that it’s even considering altering course on tapering and the real debate is around the timing of liftoff and how many rate hikes would follow after that. Markets are likely just nervous given the uncertain inflation outlook and Wall Street futures are back in positive territory today.

Retailers will stay in the spotlight for the rest of the week, with Macy’s and JD.com due to report their results before the market open.

Elsewhere, tech stocks were under pressure in Hong Kong on worries about slowing earnings and further regulatory crackdowns by Chinese authorities. However, stocks in Tokyo were lifted from reports that the Japanese government’s next stimulus package will be much bigger than expected. In Europe, shares were mostly higher, eyeing fresh record highs.

Euro selloff eases, kiwi leads the gainers

The recent plunge in the euro is likely aiding the buoyant mood in European equity markets. The single currency is down more than 7% versus the US dollar in the year-to-date, having slipped 2% so far in November alone. However, the selloff appears to have eased overnight and the euro has rebounded slightly from yesterday’s 16-month low of $1.1262 to climb back above $1.13.

The pound, meanwhile, is extending its steady recovery from last week’s lows, currently testing the $1.35 level, as investors grow more certain that the Bank of England will hike rates in December. Against the euro, sterling brushed a fresh 21-month peak of 0.8381 earlier in the session.

However, today’s biggest gainer is the New Zealand dollar, which jumped around 0.6% after the RBNZ’s quarterly business survey indicated inflation expectations by firms are sharply on the up. Both one- and two-year inflation expectations headed higher, with the former reaching an 11-year high, bolstering expectations that the RBNZ might raise rates by 50 bps at its policy meeting next week.

The greenback was softer but steady, edging marginally lower against a basket of currencies. The dollar’s ascent appears to be fizzling out as Treasury yields stepped back from their recent highs.

Turkish lira in meltdown

By far the biggest loser on Thursday was the Turkish lira, which continues to plummet across the board, hitting a new all-time low of 10.9785 against the dollar.

Turkey’s central bank is widely expected to slash interest rates again later today when it announces its policy decision at 11:00 GMT. President Erdogan left investors in doubt that a big rate cut is forthcoming after pledging yesterday to take his fight against high interest rates “to the end”.

Oil dips to 6-week low on possible supply boost

In commodities, gold was struggling to break past resistance around $1,870/oz even as yields and the dollar pulled back.

Crude oil prices were headed south as well amid a push by Washington to get other countries on board its plan to release oil from strategic reserves. President Biden has reportedly asked China, Japan, India and South Korea to tap into their reserves to ease the energy crisis after OPEC refused to boost its supply. Although no decision has been made, China seems willing to join the US in coordinated action to relieve the pressure on soaring fuel prices.

WTI futures were last trading at six-week lows below the $78/barrel level, having started the week above $80, while Brent futures were defending the $80/barrel level.

WTI crude tumbled after OPEC warned of supply surplus. The rally has stalled after the bulls struggled to lift offers at 85.00.

On the daily timeframe, the RSI’s double top in the overbought area indicates an overextension. A break below 79.00 has led to profit-taking and put the long side under pressure.

81.60 is now a fresh resistance from the latest sell-off. The buy-side will need to achieve new highs before they could bring in momentum interest. Failing that, 75.00 is a key floor to keep price action afloat.