STOCK MARKETS TANK OVER TRADE WORRIES
The price of crude oil slipped overnight after data from the American Petroleum Institute (API) showed an increase in inventories. The numbers showed that in the past week, inventories increased by 5.34 million barrels, which was higher than last week’s increase of 3.45 million barrels. These figures came a day before the official government data from EIA which is expected to show a drawdown of 940K barrels. It also came a day before OPEC ministers are expected to meet in Vienna for their annual meeting.
The Australian dollar fell after the third quarter GDP numbers missed the consensus estimates. The numbers from the Australia Bureau of Statistics showed that the economy expanded by 2.8% in the quarter. This was lower than the estimated 3.3%. On a quarterly basis, the economy expanded by 0.3%, which was lower than the estimated 0.6% and the slowest expansion in three years. The GDP numbers dampened the market after a hawkish statement from the Reserve Bank of Australia yesterday.
The British pound declined to the lowest level since 2017 after Theresa May’s government was dealt a blow on Brexit yesterday. At Westminster, MPs voted in support of a proposal that parliament should be free to determine what happens next if they reject the proposed deal by the government. With most MPs being against leaving without a deal, there’s a chance that there could be another referendum. Members will vote on May’s plan on Tuesday next week. Many expect her to lose the vote and possibly her job. Yesterday, the Advocate General of the European Court of Justice said in a legal opinion that the country was free to revoke its planned withdrawal from the EU.
In the United States, the markets closed lower yesterday as traders started to worry about the truce between the US and China. Traders are concerned that the truce will not work because of the hardline positions from the two sides. The Dow and S&P 500 indices shed 800 and 90 points respectively. This weakness spread in Asia where the Hang Seng and China A50 declined by 247 and 55 points respectively. In Europe, futures point to modest gains at the open, with the DAX and FTSE gaining by 28 and 15 points respectively. Today, American markets will remain closed as the country mourns the death of George H.W. Bush.
The EUR/USD slipped in overnight trading after yesterday’s rally. The pair declined to a low of 1.1327, which is along the lower line of the symmetrical triangle pattern. With this fall, the pair’s triangle pattern is closer to reaching the apex, which is an indication that a rally in either direction could happen. The current price of 1.1325 is below the 15-day and 30-day EMA. There is a possibility that the narrow range will be broken tomorrow after ADP releases the jobs numbers.
After weeks of sharp gains, the AUD/USD pair slipped today after the GDP numbers from Australia. The pair declined from a high of 0.7395 to an intraday low of 0.7288. The decline wiped out the gains made this week. The RSI declined from a high of 70, to the current 47 and is likely to continue the declines. The pair’s price is along the 42-day EMA and below the 21-day EMA. At the same time, the Average True Range is at the highest level since September this year, which is a sign of increased volatility. The pair will likely continue the declines before resuming the upward trend.
The GBP/USD pair declined to the lowest level since 2017 in overnight trading. The pair reached an intraday low of 1.2655. On the daily chart, the pair’s RSI is currently at 39 while the pair is below the 100-day and 50-day EMA as shown below. The current price is an important support level, which could imply a double bottom. Today, traders will focus on Brexit and the UK PMI numbers.