Amid rumors about Joe Biden’s intention to call on Congress to suspend the federal gasoline tax today, oil prices unexpectedly posted steep losses. However, such a reaction seems completely illogical. This tax holiday is supposed to lead to lower gasoline prices and therefore higher demand. Consequently, oil consumption is expected to increase. Thus, given ongoing fears of possible energy shortages around the world, oil prices should have gained value. Such a weird reaction can be attributed to speculative hype in anticipation of this important decision. Moreover, it is not yet clear which course the House of Representatives will choose. If Congress agrees to enact a federal tax holiday, oil prices will most likely soar. Now let's take a closer look at the trading chart. Brent crude oil futures managed to extend its corrective bearish movement. As a result, the volume of short positions increased, which caused a speculative frenzy in the market. At the moment, there is an increase in bearish sentiment. This downside momentum may push the asset into overbought territory in the short term, which, in turn, will lead to a technical pullback. Gold continues to lose value and has already overcome the mark of $1,830 per ounce. Gold futures are gradually gaining downside momentum, which indicates a possible change in market sentiment. If the price fixes below the 1,820 mark on the daily chart, sellers will have every chance of breaking through the main support level of 1,800. Otherwise, the yellow metal may start moving sideways. A gradual decline in gold prices is largely due to the ever-increasing pressure from monetary policy tightening by major central banks. Only the European Central Bank has not raised its refinancing rate yet. However, it is almost certain that the rate will be hiked by 0.50% at the next meeting. An additional factor contributing to lower gold prices was UK inflation data. Annual consumer price inflation hit 9.1%, ticking up from 9.0% a month earlier. Thus, it became clear that the Bank of England would probably raise its interest rate by another 0.50%. Interest rate hikes cause higher government bond yields and capital flows to the debt market. In fact, this is about the reallocation of capital between different markets and instruments. Meanwhile, the Russian currency continues to advance amid the government’s tireless efforts to weaken the ruble. The current exchange rate of the ruble is more likely to harm the economy, which is coming under tough sanctions pressure. From a market perspective, the Bank of Russia went too far with emergency measures to stabilize the situation, and its current steps to ease monetary policy are clearly insufficient. The excessive strengthening of the ruble leaves the regulator no option. The central bank is forced not only to actively cut the key interest rate but also to lift earlier restrictions. They include the requirement for exporters to sell part of their foreign exchange earnings, which should be completely abolished. Until then, the ruble will keep gaining value.
The ruble continues to ignore technical analysis signals. The quote has already reached its highest level since 2015 and is likely to extend gains. Now there is another psychological level of 50 standing in the way of the ruble, where the price may well see a full-scale correction.
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