Oil prices were little changed on Monday as investors await important US-China trade talks in London in hopes of reaching a deal that would boost global economic performance and fuel demand.

Brent crude futures rose 4 cents to $66.51 a barrel, while US West Texas shed a cent to $6.57 a barrel as of 09:40 GMT.

Brent rose 4% last week while US crude rallied 6.2% on higher rish appetite amid hopes for a US-China trade deal.

London Trade Talks

Later today in London, The US and China will conduct new trade talks following the crucial Trump-Xi trade talk last week, which helped accelerate the momentum of negotiations between both sides.

However, the prices remain under pressure after data showed Chinese exports fell to a three-month low in May, while producer prices hit a two-year nadir.

Such a weak performance for the Chinese economy doesn’t bode well for the prospects of fuel demand in the world’s largest fuel importer.

Recent data already showed China’s crude imports fell in May to a four-month low as refining companies start scheduled maintenance shutdowns. 

US West Texas Outlook

US crude prices are showing signs of lost momentum after stalling at 64.80 a barrel and dropping below the 23.6% Fibonacci level at $64.32.

Next supports lie at $64.02 and $63.78, with a breach sending the price deeper into $62.29.

Brent Outlook

Brent prices tapered off its $66.61 highs and now trades below the 23.6% Fibonacci level at $66.18.

The next support lies at $65.92 at the 38.2% Fibonacci level, followed by $65.70 then $65.48, with breaches opening the door for a deeper correction towards $65.18.

The US dollar fell against most major rivals on Monday after the wave of optimism following the US payrolls report dissipated, replaced by caution ahead of the US-China London trade talks today.

The talks come at a sensitive time for both economies, with China facing recession pressures, while US consumption and trade suffer from trade uncertainty, forcing investors reconsider the dollar’s safe haven status. 

Analysts expect the Asian currencies in particular such as the yen, the Australian and Canadian dollars to be the most impacted by the results of the new talks.

Yen Climbs on the Dollar

The dollar fell 0.55% today against the yen to 144.04 after two weeks of gains, after data showed Japan’s economy staved off recession in the first quarter of the year.

The euro rose 0.34% to $1.1433, as markets assess the European Central Bank’s announcement last week of the end of the currency cycle of policy easing, while Sterling rose 0.47% to $1.35814.

Chinese Exports Fall

In China, the yuan fell to 7.1844 against the dollar after showed Chinese exports fell to a three-month low in May, while producer prices hit a two-year nadir.

The New Zealand dollar rose 0.66% to 0.60585 against the greenback, while the Australian dollar added 0.5% to $0.6529.

Otherwise, Japanese negotiators are planning to conduct a new round of talks with the US in Washington soon, according to latest reports.

US Inflation

Later this week, crucial US inflation data will be released and will influence the course of the Federal Reserve’s policies this year.

Markets don’t expect the first Fed 0.25% interest rate cut until October as officials remain suspicious of Trump’s tariffs and their impact on the economy.

Gold prices rose in European trade on Monday away from a one-week low, and on track for the first profit in three days, ahead of the US-China London trade talks. 

The gains are boosted by the dollar’s decline against a basket of major rivals as traders await more important clues on the odds of a Fed rate cut in the second half of the year. 

The Price

Gold prices rose 0.55% today to $3328 an ounce, with a week low at $3293.

On Friday, the precious metal lost 1.25%, the second loss in a row on profit-taking away from a four-week high at $3403.

Gold fell back then after upbeat US labor data, which hurt the odds of a Fed rate cut in October.

The precious metal marked a 0.65% weekly profit last week on haven demand amid US-China trade tensions.

London Trade Talks

Later today in London, The US and China will conduct new trade talks following the crucial Trump-Xi trade talk last week, which helped accelerate the momentum of negotiations between both sides.

The Dollar

The dollar index fell over 0.3% on Monday against a basket of major rivals, providing some support to gold and other greenback-denominated gold futures.

Trump said he’ll soon announce his choice for the next Federal Reserve Chair, who would focus primarily on rate cuts.

US Rates

According to the Fedwatch tool, the odds of a 0.25% Fed June rate cut stood at just 1%, and at 17% for a July rate cut.

According to the London Securities Exchange data, traders now expect 50 basis points of US interest rate cuts overall this year, likely starting in October.

SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tons on Friday to a total of 934.21 tons, away from May 13 highs.

The euro rose in European trade on Monday against a basket of major rivals, resuming gains against the dollar and moving once more towards a six-week high as the odds of an ECB rate cut in July receded.

The gains come after the Trump-Xi phone call last week, with both sides agreeing to resume trade talks in London later today.

The Price

The euro rose 0.3% against the dollar to $1.1425, with a session-low at $1.1389.

The euro lost 0.45% on Friday on profit-taking away from a six-week high at $1.1495.

Last week, the euro rose 0.2% against the dollar, marking the fourth weekly profit in a row. 

European Rates

ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.

According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.  

The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues. 

London Trade Talks

Later today in London, The US and China will conduct new trade talks following the crucial Trump-Xi trade talk last week, which helped accelerate the momentum of negotiations between both sides.