Currency & Commodity

HIGHLIGHTS

Wednesday, 2nd August 2023

 Key News Highlights

Global News
● On Wednesday, the dollar index continued its upward trend, nearing 102.4. This gain was
influenced by a surprise move from Fitch, which led to a risk-off sentiment in the markets.
Additionally, recent economic data in the US indicated a robust labor market, further supporting
the dollar's strength.

● Fitch has downgraded the US sovereign credit grade from AAA to AA+, citing concerns about
the anticipated fiscal deterioration over the next three years and the increasing general
government debt burden.

● Additionally, Fitch predicts that tighter credit conditions, reduced business investment, and a
slowdown in consumption will lead to a mild recession in the US during Q4 2023 and Q1 2024.

● After the downgrade of the US sovereign credit grade, Treasury Secretary Janet Yellen
emphasized that US Treasuries still retain their status as "the world's preeminent safe and
liquid asset."

● The latest ADP report revealed that private businesses in the US added 324,000 jobs in July,
surpassing expectations significantly, as forecasts had predicted around 189,000 jobs. This
robust job growth indicates a positive momentum in the US job market during that period.

● In August, the yield on the 10-year US Treasury note continued to climb, surpassing the 4%
threshold. This level was approaching levels last observed in November 2022, and it rose by
an additional 25 basis points in the third quarter.

● The increase in yield was driven by growing evidence of a tight labor market, which reinforced
the argument for the Federal Reserve to maintain a hawkish stance on monetary policy.

● On Wednesday, WTI crude futures surged over 1% to surpass $82 per barrel, reaching the
highest prices in over three months. The price surge came in response to an industry report
revealing a massive decline of 15.4 million barrels in US crude inventories during the previous
week.

● This figure far exceeded market expectations, which had anticipated a drawdown of only 1.37
million barrels. If the official data due later on Wednesday confirms this inventory drop, it would
be the most substantial decline in US crude inventories in over four decades.

● Since late June, oil prices have been on the rise due to Saudi Arabia's voluntary output cuts,
which have tightened global supply. The de facto leader of OPEC is likely to announce an
extension of its 1 million barrels per day production cut through September at the group's
upcoming meeting on Friday.

● On the other hand, the Biden administration decided to withdraw an offer to purchase 6 million
barrels of oil for the US Strategic Petroleum Reserves as a measure to mitigate the impact of
increasing energy prices.

Sources-reuters.com, tradingeconomics.com, msn.com, livemint.com, economictimes.indiatimes.com,freepressjournal.in, business-standard.com, newindianexpress.com,

cnbctv18.com, thehindubusinessline.com, republicworld.com, pmindia.gov.in, indianexpress.com, businesstoday.in, firstpost.com, financialexpress.com, outlookindia.com
 Important Global Events of the Day (02-08-2023)

Here are the important global events of the day. These may impact currency and commodity
prices directly or indirectly.

Note:- JP- Japan; US- United States of America

Reference Rate Statistics Data (R.B.I)

Trade Date 1 USD 1 GBP 1 EURO 100 YEN

01-Aug-2023 82.2833 105.5777 90.4595 57.6900

31-Jul-2023 82.2481 105.7645 90.5787 58.0600

28-Jul-2023 82.2465 105.2761 90.3160 58.9500

Sources-reuters.com, tradingeconomics.com, msn.com, livemint.com, economictimes.indiatimes.com,freepressjournal.in, business-standard.com, newindianexpress.com,

cnbctv18.com, thehindubusinessline.com, republicworld.com, pmindia.gov.in, indianexpress.com, businesstoday.in, firstpost.com, financialexpress.com, outlookindia.com
 OPEC Data
The oil futures market

Crude oil futures prices averaged lower in June m-o-m in a volatile market as selling pressure,
including from hedge funds and other money managers, persisted. Sentiment in the market remained
dominated by hyped-up worries about the global economy and demand outlooks in major economies,
including the US, Europe and China. Tightening monetary policies in key economies also remained a
drag on futures prices. Oil prices came under pressure after the Bank of England announced a
bigger-than-expected interest rate hike, which was preceded by interest rate increases from the
European Central Bank (ECB), while investors weighed possible interest rate hikes from the US
Federal Reserve.

The market structure of all three crude benchmarks ─ ICE Brent, NYMEX WTI and DME Oman ─
weakened in June compared with the previous month, and the nearest time spreads of ICE Brent and
NYMEX WTI flipped into contango, signalling investors’ perceptions of an oversupplied short-term
crude market. Selling pressure was more pronounced in the front-month contracts, which also
contributed to weakening the market structure. Signs of a well-supplied physical crude market and
rising unsold volumes in Northwest Europe pressured prompt-month contracts downward. Meanwhile,
worries about the global economy and demand outlook amid monetary policy tightening dampened
market sentiment.

Source- OPEC MOMR REPORT (JULY)

Benchmark Performances As per data available at 15:53

Commodity Price Unit Change Day Month

Crude Oil 81.863 ($/bbl) 0.493 0.61% 17.17%

Brent 85.167 ($/bbl) 0.257 0.30% 14.41%

Natural gas 2.5440 ($/MMBtu) 0.016 -0.63% -5.84%

Gasoline 2.9039 ($/liter) 0.0309 1.08% 21.50%

Heating Oil 3.0538 ($/gallon) 0.0304 1.01% 28.60%

Coal 134.00 ($/tonne) -1.00 -0.74% -7.59%

Source-tradingeconomics.com

Contract Expiry Schedule (MCX)

Crude Oil

Current Monthly Contract August

Options Expiry 17th August

Futures Expiry 21st August

Natural Gas

Current Monthly Contract August

Options Expiry 24th August

Futures Expiry 28th August

ZINC, COPPER & ALUMINIUM

Current Monthly Contract August

Futures Expiry 31st August

Source- mcx.com
Crude oil at 11:15 (75 min Timeframe)

Overview- Crude oil traded near 6780 on Wednesday morning, as Crude Oil (short-term)
prices surged due to a massive decline in inventories. Both trend and
momentum were broadly in favor of the bulls. R2 7060

Price is trading near a resistance area as per the daily chart. In case R1 6845

price manages to close and sustain above the 6845 area, may show
CMP 6780
more strength in the coming days.
S1 6695

Crude oil at 16:00 (75 min Timeframe) S2 6485-6540

Overview- Crude oil is still trading near the long-term resistance area. While trend is broadly
bullish, short-term momentum seems flat, while medium-term momo is bearish. In case of a
correction, 6695 and 6485-6540 may act as areas of support in the short-term.
JPYINR at 12:00 (2hr Time Frame)

Overview- JPYINR is showing some early signs of strength. A break JPYINR (short-term)
above the red line as per the setup (0.5790) may lead to further
strength. As trend is still not in favor of the bulls and daily chart is still R2 0.5930-0.5960
weak, buying will be a contrary trade at this point. In case the low of the
candle area is broken (0.5735-0.5750), it may turn weak again. R1 0.5850-0.5870

CMP 0.5772
(Morning)

S1 0.5735-0.5750

JPYINR at 16:50 (2hr chart) S2 0.5665-0.5680

Overview- Price is currently struggling near the medium-term line. In case it manages to sustain
above this, may move towards the 0.5850-0.5870 area. On the other hand, 0.5735-0.5750 may
continue to act as a support area.
Zinc at 13:00 (2hr chart)

Overview- Zinc suggests some weakness as per the 2hr chart. Zinc (short-term)
However, it is a contrary trade at this point as trend and daily chart is
still not in favor of the bears. 221 may act as per the next support area R2 238
in case of a fall. 227 may act as a resistance area as per the current
chart. R1 228.50-230.50

CMP 225.20

S1 221

Zinc at 17:00 (2hr chart) S2 218

Overview- Zinc looks sideways. While short-term trend is neutral, medium- and long-term trend are
bullish. Short- and medium-term trend still suggest some weakness in the near-term.