Alpari Market Analysis

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BRN is under pressure after reaching above $85.00 level

BRN is under pressure after reaching above $85.00 level

BRN is consolidating below the $85.00 level amid the potential for interest rates to remain higher for longer in the US as well as in some of the Asian economies. 

This morning Japan released its inflation reading for May, which was higher than the previous period (2.8% YoY – May vs 2.5% YoY – April).

This may contribute to the Bank of Japan’s decision to tighten the policy in the near future.

In the U.S., although the number of initial jobless claims was higher than expected (238K vs. 235K expected), it fell from 243K in the previous period to 238K, underscoring the strength of the labor market.

This has prompted the markets to recalculate the odds of the long-awaited interest rate cut (interest rate cut probability: 72.3% - yesterday; 70.3% - today; 78.4% - 1 week ago).

A rate cut could boost economic output and thus oil demand.

On the support side, the drawdown in US inventories reported by the EIA acted as a stabilizer, preventing a significant drop in oil prices.

Ongoing geopolitical tensions in the Middle East continue to affect the markets, with the potential to cause significant price movements in the BRN in the event of any sudden developments.



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