U.S Yields moved higher and USD index consolidated overnight. A Ukrainian drone strike caused a fire at the Ryazan oil refinery near Moscow, one of Russia’s biggest crude-processing facilities. A site in the southern Rostov region was also hit. Both halted operations. Ukraine has stepped up its attacks on critical infrastructure in recent months. On Tuesday it launched strikes targeting energy sites in at least seven Russian regions [Source: Economist].
Brent Crude prices have been consolidating in a 81.00 - 84.00 zone since early part of February 2024. From a technical standpoint, there is a H&S formation plus and ascending triangle and a decisive breakout above $ 84.50 could turnout to be potent with 2023 highs of $ 96 per barrel in potential targets.
Fed Fund Futures are now implying 78 bps of rate cuts into 2024 from 84 bps yesterday. We have the all important PPI [consensus 0.30%] / Retail Sales [ consensus 0.40%] and the Initial and Final Jobless Claims data. Remember, PPI data is crucial for estimates of PCE and hence gains a lot of importance. Retail Sales are expected to bounce higher after the January dip.
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