WTI drops below $54 on resurfacing recession fears

Manufacturing activity shrinks in US for first time since early January 2016.
Risk-off flows weigh on crude oil on Tuesday.
US President Trump urges China not to wait until 2020 elections to strike a deal.

Eren Sengezer FXStreet

Crude oil prices came under strong selling pressure on Tuesday as the disappointing data from the US revived concerns over a recession and its potential negative impact on the global growth, which is expected to weigh on the energy demand.

After closing the previous day with a small 0.45% loss, the barrel of West Texas Intermediate today dropped to its lowest level in more than three weeks at $52.82 before staging a modest rebound. As of writing, the WTI was down 1.45% on the day at $53.98.

PMI data raises growth concerns

Earlier today, the data published by the Institute for Supply Management (ISM) showed that the economic activity in the manufacturing sector contracted for the first time in more than three years with the headline Purchasing Managers Index (PMI) slumping to 49.1 from 51.2 in July. "Respondents expressed slightly more concern about U.S.-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders," the ISM said in its publication.

Furthermore, the IHS Markit's Manufacturing PMI came in at 50.3 to surpass the market expectation of 49.9, it still posted its lowest reading since September 2009 to reaffirm the loss of momentum in the sector.

In the meantime, US President Donald Trump said that they were doing very well in the trade negotiations with China but warned China that the deal would get "much tougher" if they decide to wait to see the outcome of the 2020 election.

The weekly American Petroleum Institue (API) crude oil stock report, which is released on Tuesday under normal circumstances, will be published tomorrow ahead of the Energy Information Administration's (EIA) oil market report on Thursday.

Technical levels to watch for

WTI

Overview
Today last price	53.89
Today Daily Change	-0.73
Today Daily Change %	-1.34
Today daily open	54.62

Trends
Daily SMA20	54.85
Daily SMA50	56.45
Daily SMA100	57.93
Daily SMA200	56.27

Levels
Previous Daily High	55.12
Previous Daily Low	54.23
Previous Weekly High	56.76
Previous Weekly Low	52.94
Previous Monthly High	58.02
Previous Monthly Low	50.51
Daily Fibonacci 38.2%	54.57
Daily Fibonacci 61.8%	54.78
Daily Pivot Point S1	54.19
Daily Pivot Point S2	53.77
Daily Pivot Point S3	53.3
Daily Pivot Point R1	55.08
Daily Pivot Point R2	55.55
Daily Pivot Point R3	55.97

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.