Crude oil had its best day in history yesterday as traders hoped that Saudi Arabia will reduce production. The biggest gain came from the West Texas Intermediate (WTI), which rose by 23%. Brent rose by about 14%. There is a belief in the market that Donald Trump will put pressure on Saudi Arabia, which America protects, to slash production and stabilize the market. Still, the price of crude oil is at a multi-year low because of supply and demand side issues. On supply, all major countries have increased production after a pact between OPEC and Russia ended. On the demand side, worldwide travel has slowed, which means that less oil is being used. In a statement, Trump said, “we have a lot of power over the situation and we’re trying to find some kind of medium ground.”
US stocks had a volatile session as traders looked ahead to stimulus from Washington. The Dow, S&P500, and Nasdaq ended the day higher by 0.95%, 0.47%, and 2.30%. However, futures point to a lower open, with the three indexes set to wipe away gains made yesterday. Overnight, Republicans in the senate introduced legislation to inject more than $1 trillion into the economy. The bill includes cheques to many taxpayers and aid to many businesses. On the other hand, Democrats in Congress have faulted the Republican plan for providing insufficient aid to Americans who lose their jobs. Another reason for the decline is that the California governor issued a state-wide order to stay at home.
Later today, we will continue to follow the developing story of coronavirus. We will also watch the energy market closely and whether the Saudis will respond. Meanwhile, we will receive existing home sales data from the US, retail sales numbers from Canada, interest rates decision from Russia, and PPI data from Germany. The market will remain to be volatile as traders digest news from various sources.
XTI/USD
The XTI/USD pair rose by 23% to a high of $28. The pair is now trading at 26.52, which is above this week’s low of 20.31. On the four-hour chart, the price is between the middle and upper line of the Bollinger Bands while the RSI has moved from the oversold low of 16 to above 45. The Bulls indicator has also moved slightly above the centreline. The pair will likely be more volatile today as traders digest more information from the US and Saudi.
EUR/USD
The EUR/USD pair rose from the 18-year low of 1.0650 to a high of 1.0750. On the four-hour chart, the price is below the short and medium-term exponential and simple moving averages. The average directional movement index has risen to above 38 while the momentum indicator has been declining. The pair has also formed a morning star pattern, which means that it could rise more today.
GBP/USD
The GBP/USD pair rose in overnight trading after falling by more than 2% yesterday. The pair is trading at 1.1650, which is slightly higher than yesterday’s low of 1.1400. The pair is still below the short and medium-term moving averages while the RSI has emerged from the overbought level. The signal line of the MACD has also crossed over the histogram. The pair could rise slightly today as it attempts to recover from its lowest level since 2016.
