WTI/USD – Crude Dips Dips Below $40 on Soft US Manufacturing PMI

US crude has posted losses on Monday. In the North American session, WTI/USD futures are trading at $41.03. Brent crude is trading at $42.05, as the Brent premium stands at $1.02. On the release front, US manufacturing numbers disappointed. ISM Manufacturing PMI came in at 52.6 points, short of expectations. As well, Construction Spending and Manufacturing Prices also missed their estimates.

The Fed continued to hold the course on interest rates, maintaining levels at 0.25%. A September hike is possible, but the Fed will want to see stronger economic data before pressing the rate trigger. On Sunday, FOMC William Dudley, a close ally of Janet Yellen, said that the Brexit fallout posed a risk to the US economy and urged the Fed to proceed with caution before raising interest rates. The US will release wage growth and nonfarm payrolls later in the week, and these key employment numbers will be carefully monitored by the Fed as it mulls over a possible rate hike. If these releases do not meet expectations, the likelihood a move in September will sharply decrease. Preliminary GDP for the second quarter disappointed, as the markets had expected a strong gain of 2.6%, while the economy responded with a much smaller gain of 1.2%.

The week has started with some soft releases. ISM Manufacturing PMI and Manufacturing Prices pointed to slight expansion but both indicators fell short of their estimates. As well, Construction Prices disappointed with a drop of 0.6%, its fourth decline in the past five months. These figures point to continuing weakness in the manufacturing and construction sectors, hampering the US economy.

WTI/USD Fundamentals

Sunday (July 31)

• 21:15 FOMC Member William Dudley Speaks

Monday (August 1)

• 9:45 US Final Manufacturing PMI. Estimate 52.9. Actual 52.9
• 10:00 ISM Manufacturing PMI. Estimate 53.1. Actual 52.6
• 10:00 US Construction Spending. Estimate 0.5%. Actual -0.6%
• 10:00 ISM Manufacturing Prices. Estimate 61.0. Actual 55.0
• Tentative – US Loan Officer Survey

*Key events are in bold

*All release times are EDT

WTI/USD for Monday, August 1, 2016

WTI/USD August 1 at 13:10 EDT

Open: 41.36 High: 41.88 Low: 39.87 Close: 40.03

WTI USD Technical

• WTI/USD posted gains in the Asian session. The pair then reversed directions and has posted losses in the European and North American sessions
• 39.32 is providing support
• There is resistance at 43.45

Further levels in both directions:

• Below: 39.32, 35.25 and 30.55
• Above: 43.45, 46.69, 50.13 and 53.50

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