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06-2022

US crude oil futures settle at $107.67 | forexlive

The price of WTI crude oil futures settled at $107.67. That’s down $2.93 or -2.65%.

Crude oil

Crude oil closes lower on day after run to new cycle high

It was a another volatile day with the low price of $106.43, and the high price over $10 from that low at $116.57.

The move to the upside today took the contract price above the August 2013 high, and the May 2011 high. The pair traded at the highest level since the week of September 8, 2008.

Recall at that time the price was coming quickly off of the all-time high price of $147.27 at the end of June 2008.

Gas prices hit a new cycle high of $3.72 in the US today, with the all-time record at $4.10 from 2008 within it’s sites. Today, San Francisco became the first US city average the top five dollars a gallon on average.

The move off of the high price today saw the price move down to test the 38.2% retracement of the move up from the last swing low on February 25. That retracement came at $106.40. The low price today reached $106.43 – just above that retracement level.

It will ultimately take a move below that 38.2% retracement level to give the sellers some additional confidence. Absent that, and the correction seen today is simply a plain-vanilla variety of the last trend move higher.

Since the December 2 low at $62.46, the price of crude oil is up about 46% at current levels. That is a big move and certainly a tail wind for inflation

inflation

Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods. In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.

Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods. In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Read this term going forward.

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