Crude oil surged to the highest level in three years as investors reacted to the latest OPEC+ meeting. The members abandoned a decision to increase production after a disagreement between Russia, Saudi Arabia, and the United Arab Emirates (UAE). The meeting was due to restart on Monday after disagreements continued during the weekend. As a result, investors believe that there will be a supply shortage if OPEC members continue with this strategy. They also believe that the disagreements risk damaging the relations between Saudi Arabia and the UAE. Brent, the international benchmark, rose to $77 while West Texas Intermediate (WTI) rose to $76.20.
The Japanese yen strengthened against the US dollar after positive household spending data. According to the country’s statistics agency, household spending declined by 2.1% in May after rising by 0.1% in the previous month. This decline was better than the median estimate of -3.7%. Meanwhile, household spending rose by 11.6% year-on-year, better than the median estimate of 10.9%. The overall wage income rose by 1.9% while overtime pay rose by 20.70%. Overtime pay is an important number since it shows how busy companies are.
The Australian dollar held steady ahead of the latest Reserve Bank of Australia (RBA) decision. The bank is expected to leave interest rates unchanged and tweak its asset purchases policy. The decision comes at a time when the Australian economy is making substantial progress during its recovery. Other key events today will be the latest Eurozone retail sales and the German ZEW economic sentiment number. US markets will reopen after the long weekend. Markit and the Institute of Supply Management (ISM) will publish the latest services and non-manufacturing PMI data. Further, traders will focus on cryptocurrencies as the latest ransomware attack continues. Hackers have demanded $70 million for the encryption code.
AUDUSD
The AUDUSD pair rose to a high of 0.7550 ahead of the latest RBA meeting. This price is substantially higher from last week’s low of 0.7443. It has also moved above the descending red trendline and the 25-day and 15-day moving averages. The signal and histogram of the MACD have moved above the neutral line. Also, the pair seems to have formed a double bottom pattern. Therefore, the upward trend may continue as traders expect a hawkish RBA decision.
EURUSD
The EURUSD pair is little changed ahead of the latest Eurozone retail sales and German sentiment data. On the 30-minute chart, the pair has moved slightly above the 25-day moving average while the Relative Strength Index (RSI) and MACD are at the neutral level. The pair also seems to be forming an inverted head and shoulders pattern. Therefore, it will likely break out higher ahead or after the EU retail sales data.
USDJPY
The USDJPY pair declined after the latest Japanese economic data. On the four-hour chart, the pair moved below the 25-day and 15-day exponential moving average (EMA). It has also moved slightly below the center of the ascending channel shown in red. The RSI and MACD lines of the indicator have also continued dropping. Therefore, the pair will likely continue falling as bears target the lower line of the channel at 1110.50.
