Oil cheapens but US dollar appreciates!

00:00:00: Hi and welcome to Swisscodes, daily market talk.

00:00:03: It's Friday June nineteenth, market feelings are mixed this morning.

00:00:07: On one hand the falling oil prices on the interim peace deal between US and Iran gives hope that inflation will ease And keep central bank policies from further tightening.

00:00:18: But on the other hand a stronger U.S.

00:00:20: dollar broadly counterweighs benefits of falling oil prices for economies outside the United States.

00:00:26: Inside

00:00:27: U.S.,

00:00:27: the interim deal with Iran came as a shocker, obviously given very advantageous terms for Iran.

00:00:34: Hence peace is not a done deal just yet but this stronger US dollar today is an emerging headache.

00:00:40: So we will talk about all that and more.

00:00:43: But before we do... And As always Please keep in mind that opinions are my own.

00:00:49: This isn't financial advice.

00:00:56: This show is brought to you by SwissQuote.

00:01:11: forget about the previous day's hawkish fit announcement for a minute.

00:01:15: U.S.

00:01:15: grid short the depth below, The two hundredth-day moving average in yesterdays trading session that is near the seventy four point eighty dollars per barrel level and console days just above the seven to six dollar per barrel at the time.

00:01:27: I'm talking here this morning as the two countries the US and Iran begin a sixty day negotiation period today.

00:01:35: so if the tensions remain low per barrel range for the next three to six months and could eventually return below the fifty dollar per barrel mark within the next twelve months.

00:01:49: Because lately, The IEA has become increasingly vocal that once the Middle East disruption phase and flows normalize ,the oil market is likely to swing back into a substantial surplus in two thousand twenty seven.

00:02:04: Note that before the Iran War, the IEA had been projecting a surplus of nearly four million barrels per day for two thousand twenty six driven by strong supply growth and relatively weak demand growth.

00:02:15: Today they point at five million barrels-per-day surplus.

00:02:20: indeed The three month conflict in the Middle East And the latest spike in energy prices boosted demand For alternative energy sources.

00:02:28: Now on that subject, against all odds the Clean Energy Funds have been performing nicely since Donald Trump returned to The White House at the beginning of last year slashing everything it has to do with clean and green energy.

00:02:41: But alas now Zaxx Clean Energy fund is still up by one hundred eighty six per cent Since April.

00:02:46: two thousand twenty five dip And as we cover two thirds off its post-two thousand twenty one losses.

00:02:54: It's not only well performing clean energy find Moving forward, the energy transition will continue to develop and we'll probably attract more funds with or without Trump.

00:03:04: But Trump's Middle East war has clearly been a boon for the alternative energy providers, reminding everyone that their energy security could only be reached by alternative sources.

00:03:15: For other countries do not have traditional energy sources like Europe.

00:03:20: Now coming back to peace negotiations they won't be walking in the park unfortunately as Iran will hold onto its nuclear program whereas United States having made an incredible amount of concessions negotiation table has got very little margin left today and it's also got Donald Trump.

00:03:40: Not reassuring at all, we just learned this morning that negotiations in Bergen shot in Switzerland!

00:03:47: That were due to start today.

00:03:49: This Friday will be postponed to an all-terrier date without much information regarding why.

00:03:56: So the peace deal is not a done deal yet and the US dollar reconstruction fund for Iran gave a touch of nausea to U.S bondholders yesterday after details on that interim peace deal were released, keeping upward pressure along with the Federal Reserve's hawkish stance earlier this week.

00:04:18: Oil prices is obviously good news, but the US dollar's appreciation somewhat counterweighs a part of that relief for other economies outside the United States as energy and other commodities are negotiated in terms of U.S.

00:04:31: dollars And more expensive U. S. dollar makes energy another raw material imports More expensive for global markets.

00:04:38: The u.s.

00:04:39: dollar on the other hand Is supported today by notably more hawkish than expected Fed announcement earlier this week with the new Fed chair Mr.

00:04:48: Kevin Walsh insisting on the price stability in the US, highlighting that prices are hovering above an official inflation target of two percent for half a decade now and something needs to be done.

00:05:04: So it goes without saying that a rate cut is not the solution.

00:05:08: on the contrary.

00:05:09: To bring inflation lower, you will need to tighten the monetary policy as there's always.

00:05:13: yesterday's relief rally in financial markets on interim US Iran deal vanished.

00:05:18: this morning Nikkei is pulling back one point forty five percent from an all-time high level at the time I'm talking here, while The Korean Cosby Index sharply raised earlier gains and it's down by more than one per cent right now.

00:05:32: High volatility remains in name of the game in South Korea as highly popular memory chip makers And if global market sentiment further deteriorates, the South Korean index will probably be subject to a further volatility.

00:05:46: In the western news that Intel will produce Apple ships on the US soil gave the stock a nice boost yesterday, sending it to a fresh all-time high level indeed and pushing Van Aks my Conductor ETFs to a Fresh High as well.

00:06:00: Yet U.S futures are in negative territory at the time I'm talking here this morning under pressure of rising US yields.

00:06:07: Speaking of US yields The US two year yield is consolidating.

00:06:11: It touched below the four point twenty percent level This morning On expectation that Federal Reserve could hide interest rates could do it as soon as September.

00:06:20: Actuity on the funds future suggests that September rate hike is now given more than a seventy percent chance.

00:06:27: Elsewhere, yesterday the Bank of England and the Swiss National Bank left their monetary policy ways unchanged.

00:06:33: The Swiss actually confirmed that there was no need whatsoever to hide interest rates when inflation in Switzerland is comfortably below the two percent policy target while in Britain the British policymakers said Yes, but they still weren't that even in the event of prompt conflict resolution.

00:06:55: In the Middle East there could be a logistical delay in restoring energy production and transportation.

00:07:02: So Cable died below a critical Fibonacci retracement yesterday, which is the major thirty eight point two percent Fibronacci retracement on twenty-five to two thousand and twenty six rally hence stepped into the medium term bearish consolidation zone.

00:07:17: The bearish move is also supported by the hawkish divergence between the Federal Reserve and Bank of England monetary policy outlooks today suggesting that we could see deeper fall in cable toward one thirty psychological mark also coincides with a fifty percent Fibonacci retracement on last year's rally.

00:07:36: Across the channel, The US Dollar's appreciation also pushed the Eurodollar below the one-fifteen psychological mark!

00:07:43: The critical support here lies near the one thirteen forty five level which is the major thirty point two percent FB retracement.

00:07:55: Here as well, the Fed's hawkish divergence will likely play in favor of a deeper pullback in the Eurodollar toward and potentially below that level.

00:08:03: And note Europe's depreciation will also keep inflationary pressures in the euro area sustained and could encourage a more hawkish European central bank stance moving forward.

00:08:14: But unfortunately for the euro-area economies, the dull and bleak growth outlook will be limiting factor on how far the European Central Bank would turn hawkage that will limit its potential to rebound against US dollar.

00:08:29: today That is pretty much the same scenario with The UK group's story, but on top of the economic troubles in the

00:08:37: U.K.,

00:08:44: well, and for the Bank of England as well, that I have to do a part-of-the heavy lifting moving forward by adopting more hawkish monetary policy tone than otherwise.

00:09:02: You will have time to dive into this story in coming weeks!

00:09:05: But now let's move on to the precious metals before we close the week.

00:09:09: The rising US yields today increase opportunity cost of holding non interest bearing gold And hands will likely send price of an ounce below forty one fifteen dollar per ounce mark, which is the major thirty point two percent Fibonacci retracement on the latest bullish trend that started back in October.

00:09:27: Two thousand twenty three now we are just close to that level and We could see the bullion return to a thirty five hundred to four thousand dollars per ounce range In the continuation of this deflating speculative bubble without however damaging the gold multi-year bullish trend.

00:09:45: In a short one, the U.S.

00:09:46: dollar's appreciation could accelerate to the gold sell off if especially global central banks continue to sell their gold holdings so stabilize their currencies.

00:09:55: but in the longer run they will be replenishing their weakened gold reserves which would keep gold demand intact as US latest military ambitions and additional pressure on encourage a further replacement of the US Treasuries by the yellow metal from major institutions like the central banks.

00:10:17: So this is all for today, I am Ipek Oskar Deshkaya and thank you for joining me!

00:10:22: And Thank You For All Your Beautiful and Supportive

00:10:34: Comments!!

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00:10:57: So I will meet again next week and until then good day trading.

00:11:01: have a lovely weekend.

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