The Brent rise, waiting for the OPEC deal

With Brent that trades around $49,43bbl, Oil has recovered 50% of the disadvantage accumulated during the first days of November, and it seems that the commodity wants to go back to the October highs, driven by expectations of an OPEC deal.

The price has been fueled by a renewed push of the members of the Organization of the Petroleum Exporting Countries which have expressed a willingness to work together to reach a common agreement on the output level during the crucial meeting next week.

The positive momentum is fueled also by the Russian president Putin, who recently said that an agreement could be done during late November.

The continuous news coming from OPEC will for sure favor certain movements of the Oil price during today’s session, while later today the API report on the Oil inventory will lead the investors view.

brent_22_nov

Looking at the chart from a technical point of view, a beak of the significant resistance @ $49,85 (61,8% Fibo level) would expose the Brent price to a rise to $50bbl. On the opposite side, in case the price would break the support @ $49,00 i expect a drop until the $47,77 level (100-DMA).

 

 

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USD: what if Hilary wins…

In the US someone said that a possible win of Hilary Clinton at the elections, obtained without a democratic majority, could bring to very little movements of the major G10 currencies.

More specifically, now, with decreasing political uncertainties, we may see a US rates recovery accompanied by an equity bullish movement.
In terms of currencies, however, interesting is the relationship with the Japanese Yen, which would function as a hedging tool against Trump risk, and this may lead to an increased vulnerability of the US dollar against the JPY.
Opposite situation with regard to low-yield currencies such as EUR and CHF, which could underperform against the Greenback in relation to the safe haven status that distinguishes them.

Placing a focus on the EUR/USD, it is easy to note that the 1.1200 area continues to be a strong resistance to occasional spikes the drops.

eurusd-04nov

The yesterday’s rally met an initial resistance at 1.1123 (August-September Low) and then descend and climb again with a swinging motion. At the time of writing the cross is trading at 1.1097 slightly down compared to yesterday’s close (-0.07%), while the markets remain calm looking forward to the release of today’s data on Unemployment and Non-Farm Payrolls.

At about 13:30 (Italian time) we expect a gradual increase in volatility, as often happens during events of this importance, so we could see also quite relevant spike and drop.

New Zealand Dollar – The imminent cut

It continues the walk of the New Zealand Dollar on the back of a positive macro-economic environment with an inflation which is still pretty low.

In the meantime the Q3 CPI was up just 0,2%, way less than expected from the RBNZ (2,0%) and this emphasizes the need of another OCR cut the next 10th of November to a possible record low of 1,75%. This scenario could scare the NZD buyers with the possibility of a cut in the next 2 weeks.

 

The NZD price however still remains higher that 2 weeks ago even if the drop of last week to 0.7265 is still alive.

The recover of the US Dollar extends also in Europe, with the markets still in risk-off mode, and at the time of writing the NZD/USD pair is traded @ 0.7164, exactly at the opening level after a drop which led the price to touch the low @ 0.7147. The cross seem not to be able to break the 0.7170 barrier, being under pressure by the drop of the Oil stock and price.

 

In the coming weeks, the strength of the Greenback will be a dominant factor on the market, with the rumors of a hike from the Fed on the December meeting still going on. The divergence between Fed and RBNZ seem to weigh on the Kiwi which has not benefitted from the huge gains against the OZ after the good CPI report.

kiwi_26_oct

The attention is now on the NZD trade balance data scheduled for tonight.

Looking at the chart, you can see the next resistance @ 0,7190, while on the negative side, a possible drop could led the cross to the first significant support at 0,7100.

 

Cable on track to see the 3rd red consecutive day

With next month’s data regarding UK public finances expected just the day before the Autumn Statement (23rd Nov), the September data are in fact the last reading of the deficit that analysts will have available before knowing expectations and revisions planned by the government for 2016-17.

In the event that the output data during the day today should confirm the trend in place since the beginning of the year, this would imply for the UK a debt of about £ 6bn. The Autumn Statement will be definitely able to explore different topics including the review of macroeconomic forecasts, the loosening of fiscal policies and changes in the privatization plans.

cable-21ott

Meanwhile Cable seems to extend its decline for the third consecutive day, with bears who now see for the cross the target level of 1.22 on the back of weakness in oil prices and the general appreciation of the Greenback.

At the time of writing the GBP/USD is trading @ 1.2247 posting a 0.05% decline, with European markets which continue to favor risk-off profile among investors, thus giving impetus to the US Dollar.

Today’s focus will be on the UK public sector data and the Fed conferences in the late day.

Taking a look at the Cable chart, it can be identified the first support @ 1.2220, which corresponds to the 10-DMA, broken which it could lead to the 1.2173 level (18th of Oct low).

 

The Gold update

gold-bullion

A slightly lower move seem to drive the Gold price after the flat move which characterizes the end of the Asian session of this Wednesday 19th of October. The precious metal seem to be conditioned by the Chinese Economic data revealed a few hours ago with the bulls that for the moment are keen to push the level close to the 200-DMA, but for now they are experiencing a limited downside.

At the time of writing the commodity is traded @ $ 1.261,17, 0.05% lower after having touched the $ 1.264,75 level this morning. Despite Chinese data, the Dollar weakness continue to weigh, trying to push high the Gold level.

Pay attention at the Treasury Yields, ecpecially regarding the short-term part of the curve, which have a strong correlation with the Gold and the US Dollar and reflects the Interest rate expectacions. At the same time, the Dollar Index is traded with a negative performance of 0.08% @ 97.82.

Looking at the chart, we can see the first significant resistance positioned @ 1.276 (200-DMA), while on the other hand, if the downside move will extend his power, the first support is seen @ 1-258,30 (5-DMA).

gold_19oct

 

Bulls pushes USD/CHF up

usdchf

The USD/CHF cross extends its recover during European session, after having touched the 0,9770 support, and at the time of writing is traded @ 0,9786 making a slightly positive performance of 0,13%.

The attempt to recover the 0,98 level is powered by a renewed USD demand pushed by the Bulls which seen favorably Friday’s Fed statement on the US employment situation and which seem to renew the risk sentiment on the market. With this in mind, the Dollar Index moved up 0,19% gaining the 96,70 level.

The Swiss Franc, from its part, seem to remain impassive to the Swiss employment data, and this behavior fueled the bullish tone of the USD/CHF. The unemployment rate, however, remains unchanged @ 3,2% as expected.

usdchf-10oct

To keep an eye on, regarding the Greenback, will be this week’s Fed spokesman speeches, FOMC minutes and US retail sales data.

Looking at the chart we can find the next resistance @ 0,9850 followed by the 0,9900 one. To the opposite side, the first significant support is located @ 0,9757, the 200-DMA.

A flashing GBP crash

An hard night for the sterling which have seen during the night an heavy drop against its main peers such as USD, EUR and JPY.

Starting from the Cable, the 6% drop started a few moments before the Tokyo opening, after market speculations about the French President Hollande which point the finger against the hard Brexit. In the meantime it seems that something has happened: there has been a fat finger, that is an error from an investor on the market which have consequently misguided the Algo, pushing them to collaborate at the collapse of the GBP/USD.

cable-7oct

The collapse pushes the price from almost 1.2615 to a multi-decade minimum @ 1.1841 in few minutes, before recover almost 6 big figures and trading at 1.2457 (-1,25%) at the time of writing.

It is not excluded however, a new Cable sell-off in the opening of the European session.

Similar situation against the Japanese Yen, with the GBP/JPY which recovered almost 62% of the total drop seen during the night.

gbp-jpy-7oct

The unexpected drop led the cross to a minimum of 122.90, while at the time of writing the losses are almost 1.34% with a trading price of 129.36.

GBP losses even against the Euro, which this time pushed higher the EUR/GBP cross, with a spike which led to a max of 0,9270 during the night and at the time of writing the cross is still 0,91% positive @ 0,8919.

eur-gbp-7oct

Today will be a day full of events with the UK industrial production (expected @1.3% against a previous 2,1%) and the UK trade balance.

Something that will add volatility to the markets will be the US non-farm payrolls, which could boost the USD rally against the majors.

 

 

AUD: the Aussie reaction to the RBA’s non-move

As expected the RBA decided not to change the interest rate keeping it @ 1,5% with the Central Bank’s words pretty neutral and for the first time with Governor Lowe on the chair.

Following the RBA “Taking account of the available information, and having eased monetary policy at its May and August meetings, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”

Regarding inflation, moreover, the RBA says it “remains quite low. Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.”

Looking at the AUD level, the Central Bank reiterate its opinion not to prefer a stronger price, which could complicate the economic adjustment process.

aud-usd-04oct

In the meantime the Aussie moved up against the US Dollar, keeping the AUD/USD higher after a brief dip pre-RBA which led the cross to the daily low @ 0.7667.

After recovering the losses, at the time of writing the cross is traded with a neutral performance @ 0.7674 with the first immediate resistance positioned at 0.7691 (daily high). On the other hand the first significant support is seen at 0.7653 (10-DMA).

aud-jpy-04oct

A stronger positive move against the Japanese Yen, with the AUD/JPY which gained the 78.58 level pre-RBA, before losing momentum. At the time of writing however the performance is still 0,44% positive @ 78.3375.

A breaking of the 78.67 level could led the cross to the resistance positioned at 79.13 (6 September high), which could represent a good opportunity to se a temporary retracement of the cross.

 

Cable’s spike could deceive

A flashing spike characterized today’s opening session with the GBP/USD brought, even for a small time, to the 1.3060 level, and coming down a few moments later, trading at +0.02% at 1.3022 at the time of writing.

The almost complete erosion of this initial gain is a consequence of the correlation to the Oil price action, particularly keeping in mind the OPEC news, for which they reached an agreement on the price of the commodity. At the same time the US Dollar is moving generally up on the back of improved durable goods data (0% against -1.5% expected) and the Yellen’s speech, which led to the Cable weakness.

cable-29set

Today’s session will be characterized by the release of a big number of important data to keep an eye on, first of all the German’s labour market, the English Consumer credit and Mortgage approvals data and US GBP data.

Level to consider following the technical analysis for the GBP/USD cross see the first resistance positioned @ 1.3058, today’s session high tested after the initial spike and which could represent a first hurdle to the upside. Broken this first level the Cable could have open road to reach 1.3125 (22 September high).

 

Brent and WTI volatility: effects on USD/CAD

It is a moment of high volatility for Oil markets on both side of the Atlantic: during Asian session both moved up after the drop in the US Oil inventory and relative products, but now they are in negative territory yet.

At the time of writing Brent is trading down 0,21% at $46.12bbl while WTI is making a negative performance of 0,67% at $44,61bbl after having touched the $45.08bbl level.

 

The American Petroleum Institute (API) data showed a drop in the US Oil inventory of 752,000 barrels against all expectations which saw ad increase of almost 3 million barrels. Distillates on the other hand experimented the first inventory drop in seven weeks with a 343,000 barrels decrease. Also Gasoline inventory went down 3.7 million barrels.

Looking at the currency that is most influenced by the US Oil price, the USD/CAD cross find a good support @ 1.3192 and at the moment is traded positively of .18% @ 1.3222.

cad-further-evidence-of-breakdown-in-cad-oil-link-where-to-target-cibc

The cross still remains fairly bid, despite difficulties to extend gains above the 1.3250 barrier due especially to the slowdown of the Oil price decrease after the API report.

Another element to fuel the pair price action is the recent slowdown of the US Dollar against its major peers, which let the USD/CAD to be capped.

usd-cad-28set

Looking at the chart the first significant resistance is seen @ 1.3250 (psychological level) after which we can find another psychological one at 1.3300. On the opposite side the first hurdle to the downside is seen @ 1.3192.

All the eyes are now facing Algeria where the meeting could (unlikely) lead to a production freeze agreement. Traders have to pay attention to the US Government weekly inventory data too, which could fuel unexpected movements of the cross. Not to forget the US economic data and the Yellen’s speech.