Oil intermarket: oil back to $50.00 and general demand back in play
Oil has rallied back to $50.00 with stock markets back on the bid and US 30 yields indicating a demand driven rally across the global financial arena. DXY on the other hand has moved in the same direction, but that could be down to safe-haven flows emanating from Brexit fears that have accumulated a long position in the US dollar over the past couple weeks.
DXY has risen from 93.50 to 95.13 highs, dropping back to 93.39 by the start of this week and has since picked up a bid again on to the 94 handle. However, the correlation between DXY and oil broke down today. DXY met its highs on the 16th June and was sold off before oil picked up the bid later that day, rallying from 46.20 highs to 48.30 and then gapping higher to 49.05 as DXY continued its decline and US 30'sY continued their advance from 2.36 until 2.51 today.
However, it wasn't until oil started to fade yesterday when the DXY picked up the bid today, and now that oil has rallied on the back of the API data that has reported a massive 5.2m barrel draw, perhaps that will dent to bulls attempts although as we head into Brexit's D-day 23rd June, the dollar's bullish case could well be amplified on risk aversion still and oil tends not to do so well in the face of risk-off market conditions.