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LATAM FX

Price Signal Summary: USD Remains Below Recent Highs

PIPELINE

Citigroup 3Pt on Tap

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  • In the past few weeks, we have seen that the rise in uncertainty over the 'Delta variant', the deceleration in the economic activity in Asia and the contraction in Chinese 'liquidity' have been weighing on a diversity of risky assets, including industrial metals such as copper.
  • However, the tight supply combined with the accommodative monetary policies run by the major central banks keep pushing oil prices higher, currently trading at its highest level since July.
  • In addition, investors have historically used oil as an inflation hedge (oil and nat gas are the two best performing commodities when inflation accelerates above 2%).
  • The chart below (monthly candlestick chart) shows that Brent is currently testing its key LT downward trending resistance line; a break above that level could signal the start of a new bullish ST trend on oil.
  • Next level to watch on the topside stands at 80, followed by 82.80 (October 2018 highs).

Source: Bloomberg/MNI