WTI/USD

Hopes that the US driving season would propel prices to new 2024 highs this summer failed to materialise as demand remained weak in key economic regions like China. At the same time, the OPEC+ appeared content with plans to increase output from the fourth quarter.

I imagine quite a few central bankers and politicians will be rolling their eyes or shaking their fists OPEC's way, as the surprise oil production cut adds inflationary pressures back into the mix.

Competing themes has seen oil prices rally thanks to risk-on sentiment, yet the yen is the strongest major likely due to the repatriation trade

Today’s UK inflation print could be the difference between a final 25bp hike from the BOE tomorrow, or a pause. Then our attention turns to the FOMC meeting.

We might see an oversold bounce in prices soon but until something changes fundamentally, the path of least resistance would remain to the downside

Whilst US CPI is likely the main event of the week, UK wages data could also turn the dial for the BOE, which is why GBP/USD implied volatility has spiked.

Despite hopes of a rebound in demand due to China’s reopening, oil bulls have repeatedly failed to help WTI crude oil close above $82 – and momentum now points lower.

WTI suffered its worst day in 30 yesterday, with a combination of a stronger US dollar, recession concerns and weaker natural gas prices all playing their part for a bearish session.

We see a technical case for EUR/GBP to top out over the near-term, which could be helped if Germany deliver a soft inflation report today.

Jerome Powell hit the wires and effectively confirmed that the Fed will slow their pace of tightening, reigniting the argument over what a ‘pivot’ is.