LiveWire

WTI Crude oil has rebounded strongly for 3 reasons. (1) First, supply is restricted in the medium term given OPEC+ vowed to cut further production. This comes on top of the reduction by Russia. (2) Secondly, global demand is not coming off track and we would need to see a sustained downward path in economic growth, which is not the case. (3) Third, the dollar has lost so much since November 2022, that the lower dollar is helping support oil prices. This should be a net negative for the overall stock market as it stimulates inflation. For instance, average retail gasoline prices climbed 8% since the end of February. April data could be worst given the recent surge. 

Today's US CPI data for March could add volatility to the euro-dollar pair. The euro has benefitted from falling fears of energy scarcity and a hard-landing in Europe. It's also benefited from a rapidly falling dollar as traders re-price lower US interest rate expectations. 

Over 90% of yield curve combinations have been inverted since 2022. And every single time since 1978 this level of inversions has occurred, recession followed. However, in 1978 occurrence still took ~24 months before the recession. Now the big question is, should a recession occur, will it be a soft or a hard landing, and to what extent are stocks pricing it in already?

The USDCHF currency pair looks increasingly interesting from a buyer's trading perspective. Yet, traders would do better to wait for a more attractive risk reward. RSI should first fall in oversold territory and show signs to set lows. And the support level of around 0.9020 should be closely monitored. Once the lows are set, the USDCHF could offer a strong rebound opportunity but are unlikely there quite yet.  

Oil prices surged after the surprised production cuts by OPEC+. Now the question remains about the state of global demand. It also reveals the cartel is worried about the oil price slipping further, and shows the thin level of tolerance for the cartel. From a trading perspective, oil is now at the top of its range and traders should patient for a clearer setup now. Our view was for oil to rally from the floors set during the Credit Suisse and Deutsche Bank scare, but now that trade doesn't have an attractive risk reward anymore.