Oil closing the gap soon?

Two countries have reported their inflation numbers recently. Yesterday, it was Canada, where we got a whole mix of inflation data! CPI reported monthly came lower than expected at 0.5% (0.6% exp). Median CPI (y/y), on the other hand, came above expectations (4.6% vs 4.5% exp). We also got Trimmed CPI (y/y) which, on the contrary, came in line with expectations. The end of the story for the Canadian dollar was its weakening and finishing Tuesday as one of the worst currencies on the market.

The second country was the UK who reported its inflation this morning. The forecast was below 10% at 9.8%, but the Britons were negatively surprised with their costs of living rising by more than 10% a year (10.1% to be precise). This rise positively affects the pound as it demands a more hawkish approach from the Bank of England.

The inflation in the UK depletes the tier one data in today’s calendar. We will learn the inflation numbers from the Eurozone later but this is the final reading which almost always comes in line with expectations, and doesn’t have the potential to create any meaningful moves.

It looks like Wednesday will be very interesting for the commodities. Gold is currently declining sharply and attacking the lower line of the channel-up formation. A proper breakout can lead the price towards the horizontal support around 1950 USD/oz. Even more exciting things are currently happening for oil as Brent, for example, is attacking the bullish gap created after the OPEC+ output cut announcement. Once the price closes near its daily lows, the chances of a further gap-closing move will increase significantly.