West Texas Intermediate (WTI) Crude Oil prices fell to–$40.37. They dropped under $60.00 per barrel, slumping to three-week lows just above $58.40. Domestic energy traders are looking to get a clue from the new American Petroleum Institute (API) inventory count. These counts will hopefully provide some much-needed transparency into the state of oil supplies in this oil bust.
The recent fall in WTI prices is illustrative of larger trends in the energy market. Even as traders look ahead to that API reading on national inventory levels, the focus remains on supply and demand dynamics and shifting market sentiment. The selloff underneath the $60 threshold is a turning point for crude oil. It puts the markets to the test, gauging their resilience in the face of sometimes drastic, sometimes subtle changes to global economic indicators.
In the currency markets, no surprise here, the big EUR/USD pair is treading water as it continues to enjoy that five-day winning streak. Currently, the price is facing the upper boundary of this range. At the same time, the 50-day Exponential Moving Average (EMA) is hovering near the 1.1625 level. Analysts point out that the 1.1500 level is a solid technical floor for this major currency pair. This deep backing, particularly against agency risks, has done a great deal to shore up trading.
Gold prices are still telling a story rooted in an investor undercurrent of fear. XAU/USD gold bid prices remained elevated above $4,200 per ounce on Wednesday, reflecting continued strength in demand for the safe-haven precious metal in times of uncertainty. Traders are eager to see how the price action will behave as it nears the 50% retracement of its most recent swing low. This moment heralds great opportunity, fierce and portentous price volatility, in the maddening and multilayered world of precious metals.
Along with the JPY, the GBP/USD pair as well is having a hard time getting ahead of the 1.3200 mark. As of writing, it’s putting the 1.3100 level to the test. This standstill further underscores the headwinds the currency pair has faced, as larger economic conditions have burdened performance.
Meanwhile, considerable gains by the yen, led by USD/JPY are becoming increasingly notable, as the pair currently tests nine-month highs over 154.00. This momentum positions USD/JPY for a potential third consecutive month of bullish performance, reflecting a general improvement in global market sentiment. Perhaps investors are catching up with how optimistic we’ve all become, especially as we see progress on a short-term funding deal for the US government.
Markets are responding enormously to these actions. Should the next resolution on government funding include a compromise deal, investors look poised to take the plunge back into riskier assets. As a result, successful negotiations can greatly improve market confidence. They can go a long way in reducing uncertainty and setting the right tone to foster an investment-friendly environment.