Crude jumps to YTD highs as bullish sentiment takes over
The price of crude oil jumped in overnight trading as traders cheered the ongoing supply cuts by OPEC. These cuts started after the December meeting in Vienna during which officials announced that they will cut production in a bid to rebalance the price, which had fallen to yearly lows. This move was supported by Saudi Arabia and Russia, which are the second and largest producers in the world. The price has also moved up because of the sanctions US has placed on Venezuela, which has the biggest oil reserves in the world. The price rose even as data from Baker Hughes showed that wells rose to 831 from the previous 816.
The US dollar weakened slightly in the Asian session as traders continued to think about Friday’s jobs numbers. Data showed that the economy added more than 196K jobs in March, which was higher than February’s 20K and the expected 176K. The unemployment rate remained at 3.8% while the participation rate declined slightly to 63%. The private non-farm payrolls increased to 182K. Concern among investors is on the weakening wage growth, which reduced to 3.2%. Over the weekend, Trump administration officials appeared to back Herman Cain, the embattled nominee for a Fed board position. He is the second controversial Fed board nominee by Trump, after the previous nomination of Michael Moore.
Today, traders will focus on Brexit, as the April 12 deadline nears. Theresa May has embarked on a strategy to include the Labour Party in negotiations. In addition, they will receive trade data from Germany. The exports and imports data for February are expected to show a decline of -0.5% and -0.7% respectively. The trade surplus is expected to decline slightly to $18 billion. In the United States, the Bureau of Census will release the capital goods and factory orders.
The EUR/USD pair was little moved in early trading as traders reflected on the jobs numbers. The pair is now trading at the 1.1225 level, which is closer to the previous low of 1.1185. On the hourly chart, this price is along the 50-day and 25-day moving averages while the volumes have shrunk. The Average True Range and Standard Deviation has also shrunk. The pair will likely remain within these levels ahead of the ECB interest rates decision on Wednesday.
The price of crude oil jumped to a YTD high. Brent and WTI reached highs of $70.50 and $63.45 respectively. On the daily chart, the price has been on an upward trend since December 12, when it traded at $50. The current price is slightly above the 50% Fibonacci Retracement level and above the 25-day and 50-day moving averages. The signal line and histogram of MACD has remained above the neutral line while the momentum indicator has stabilized above the 100 level. The price will likely continue moving higher ahead of the OPEC meeting expected in the coming week.
The price of gold moved up slightly in early trading today. The XAU/USD pair is now trading at 1296, which is slightly higher than last week’s low of 1280. It is slightly lower than the important resistance of 1300. On the hourly chart, the price is slightly above the 50-day and 25-day moving averages while the RSI has moved slightly closer to the overbought level of 70. Today, the pair will likely move upwards to test the 1300 level.