US Futures Setting A Strong Tone | How Low Can Oil Go?

Posted by Naeem Aslam | 07/06/2018 09:25

US futures are roaring once again, investors are picking up the momentum where they left off yesterday. Dow Jones topped the 25K mark yesterday and the NASDAQ is equally flexing its muscles. This has stimulated confidence amidst investors.

European political woes have taken the back seat. Investors are finding comfort that things are back to normal after Italian Prime Minister won the second vote of confidence without any labour. There has been enormous upheaval in the European political landscape from all angles: a new government in Italy, a new Prime Minister in Spain.
 
Yes, on the outset,  things are looking a lot more calmer today but investors should not forget that the new government in Italy is a populist one. Tensions could anchor in no time.
 
When it comes to the forex market, it is only one event which matters the most- the European Central Bank meeting. Although, the Euro is no longer as strong as it was a couple of months ago, but we do think that between now and until the day the ECB meets, it is likely that the path of the least resistance may be skewed to the upside. Why? Because it is about time that the ECB shows it’s strong side and a firm stance towards winding down the tents of its easing monetary policy.
 
Euro bulls have already started to react positively and the Euro/Dollar pair has gained a lot of its lost ground. The battle is on.
 
As for the energy market, we are seeing some recovery in the oil market and the fact that Venezuela is in trouble with respect to its export. The flashing red light on the trader’s dash board is still the possibility of the production increase by the cartel- OPEC. The cartel curved the supply to prop up the prices but given that the Iranian oil may see some roads closed to the global market, the cartel needs to cover this supply.
 
Realistically speaking, the price has been battered already from its highs: the price of WTI moved from its high of $72 to all the way to $64. But, I do think there is still more room left for this trade as speculators would aim for the round number of $60.
 

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