During the past weekend, the Yemen Houthis had launched a number of missiles and drones aimed at the Saudi Arabia Capital Riyadh and economic and military sites in other cities nearby the Yemeni boarder. Fortunately, the missiles were taken down by the Saudi air defense systems, before hitting their targets. However, the attacks could have been aimed at the Oil producing sites of State-owned Saudi Aramco that had been hit by similar attacks, back in September 2019. The attacks take place during a very difficult time for Saudi Arabia as they are currently in an intense rivalry with Russia, regarding Oil production levels and they are also dealing with adverse effects of the Coronavirus epidemic spreading, which has placed the country on a lockdown. Even though the news adds to the global uncertainty, the happenings could be exciting for Oil traders or safe haven traders that can use the news to trade the markets. Saudi Arabia has suffered many attacks in the past years from the Yemen Houthis and many believe the situation could lead to more intense war actions in the area. WTI prices have remained rather low and inactive in the past weeks, yet if the attacks on Saudi Arabia persist then prices could pick up volatility, as the Saudi Kingdom are among the top Oil producers of the world. WTI’s price saw a minor weakening in the Asian session today and the commodity attempted to move breach our (S1) 22.45 level. Until now, a clear break has not been observed yet if the selling momentum continues then the next levels to the downside could be the (S2) 20.50 last seen on the 18th of March and even lower the (S3) 18.50 level. In the opposite direction if the commodity comes under a buying momentum, the first level to be tested is the (R1) 25.75 line that was last seen last week on the 26th of March. Even higher we could see the (R2) 28.45 resistance level being tested and we also leave a possibility for the (R3) 30.60 line being reached.
China plans further fiscal actions to boost economic recovery
China claims it has finally been able to contain the virus outbreak in its Mainland and in the past days it had seen only imported cases of COVID-19 being reported. The Chinese can now turn their attention to economic actions that will further support households, as the negative effect is just starting to show up. Chinese banks have suffered major blows in the past two months, as they have seen a significant increase in past due loan payments. According to a report by CNBC released in mid-March, approximately 5 million people lost their jobs in the past months and economists forecast that by the end of the year the unemployed could reach a figure nearby 9 million. However, China is expected to throw hundreds of billions of dollars through its government stimulus program, to ease the circumstances and increase economic confidence. Incoming Chinese financial data released this week regarding March, will shed some light over the situation. Traders could show great interest in the results of the financial data and currencies like the CNH and AUD may see significant reaction, especially if results are better than expected. During the past Friday AUD/USD continued to move higher and tested our (R1) 0.6180 level but did not breach it. That level was last tested on the 16th of March. In any case, a move above the (R1) could lead the currency pair to the (R2) 0.6280 line and the next step higher could be the (R3) 0.6465 line. Please note the pair could be very sensitive to both US and Chinese financial data released this week and strong volatility could come into play. In a bearish scenario the levels to the downside are the (S1) 0.6075, the (S2) 0.5980 and the (S3) 0.5900 levels. The (S1) was last tested on the 25th of March, and most of the price action of the currency during the past week, was between the (S1) 0.6075 level and the (S3) 0.5900 line.
Other economic highlights today and early tomorrow
Today, in the European session we get the Eurozone’s Economic Sentiment and the German Preliminary HICP both for March. In the Asian session on Tuesday, we get from the UK the GfK Consumer Confidence for March and the Employment data and Preliminary Industrial Output from Japan. Later in the Asian Session we also get from China the NBS Manufacturing PMI for March.
AUD/USD 4 Hour Chart
Support: 0.6075 (S1), 0.5980 (S2), 0.5900 (S3)
Resistance: 0.6180 (R1), 0.6280 (R2), 0.6465 (R3)
WTI Cash 4 Hour Chart
Support: 22.45 (S1), 20.50 (S2), 18.50 (S3)
Resistance: 25.75 (R1), 28.45 (R2), 30.60 (R3)
