Australian Dollar New Surge; Oil Prices Fall Despite Stockpile Drawdown

Australia’s July CPI moderates to 3.5%, causing the Australian dollar to surge again. Oil prices fall despite a significant stockpile drawdown, and Key Fed speeches could impact markets.

Australia’s Consumer Price Index (CPI) for July has moderated for the second consecutive month, coming in at 3.5% year-on-year, slightly above the forecast of 3.4%. The July figure shows a decrease from June’s 3.8% but a continued increase in specific categories, including food and non-alcoholic beverages, alcohol and tobacco, and healthcare. Though below the previous month’s rate, this moderation increased the Australian dollar. The Aussie surged from around 0.6780 to a high of 0.6813 against the US dollar following the announcement, signaling potential further gains as trading continues.

Impact on European and US Markets

The API reported a larger-than-expected drawdown in crude oil stockpiles in the United States, with 3.4 million barrels removed from storage compared to the forecasted 3.0 million. Despite this drawdown usually indicating increased demand, oil prices fell by over 2% following a solid performance over the previous three days. The geopolitical risks in the Middle East also contributed to the retreat of WTI oil prices, which slid from $78 to $76.16 per barrel overnight. As Asian markets opened, WTI traded around $76.50 per barrel. A higher drawdown in the upcoming EIA inventories report could be a bullish catalyst for crude oil prices later today.

Australian Dollar New Surge; Oil Prices Fall Despite Stockpile Drawdown

Dollar Index (DXY) and Central Bank Updates

Federal Reserve Governor Christopher Waller will speak at the Global Fintech Festival in Mumbai at 5:15 a.m. GMT. Although his speech will focus on digital payments, he may face questions regarding future monetary policy. Federal Reserve Bank of Atlanta President Raphael Bostic will also speak at a moderated discussion in Atlanta at 10:00 p.m. GMT, potentially increasing dollar volatility.

The Federal Reserve’s recent policy update maintains the Federal Funds Rate target range at 5.25% to 5.50% for the eighth consecutive meeting. The Fed focuses on achieving maximum employment and a 2% inflation rate, with the next FOMC meeting scheduled for September 17-18, 2024.

Gold and Currency Pair Predictions

Gold prices can experience a weak bearish movement today, influenced by the potential volatility stemming from the speeches by Federal Reserve officials. Similarly, the Australian dollar (AUD) should continue to rise, given its recent CPI data. Conversely, the Canadian dollar (CAD) can show weak bullish movement, driven by its more robust performance against the US dollar.

Additional Currency Movements

• NZD: The Kiwi dollar remains weak and bearish, trading between 0.6200 and 0.6300.
• JPY: The Japanese yen shows weak bullish tendencies, with support at 142.00 and resistance at 147.00.
• EUR: The Euro exhibits weak bearish trends, trading between 1.1100 and 1.1245.
• CHF: The Swiss Franc shows weak bullish tendencies, with support at 0.8400 and resistance at 0.8480.
• GBP: The Pound continues its weak bearish trend, with support at 1.3185 and resistance at 1.3300.

Oil Market Outlook

The oil market’s short-term bias is medium bearish, pending the EIA Crude Oil Inventories report, due at 2:30 p.m. GMT. If the EIA data confirms the previous API report’s drawdown, it could indicate a potential reversal.

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