Crude oil price rises to three-month high on OPEC supply cuts
The price of crude oil was little moved in morning trading. This comes after last week’s rally that saw the commodity reach a three-year high. The reason for the rally is the perceived increase in demand coupled by supply cuts by OPEC. At the same time, investors have already priced-in increasing supplies from the United States. On Friday, a report by Baker Hughes said that oil rigs had increased from 854 to 857. This was a continuation of a trend that started in 2016.
The markets will see a slowdown in volumes today as US investors will be away from the market as they celebrate George Washington’s birthday. Investors will also receive limited data from around the world. The most important will be the monthly report by the German central bank which will give investors much-needed insight into the German economy. It will also include German views on international macro issues. In recent months, data from Germany has shown that the economy is softening with PMI and trade numbers at historic lows.
The Japanese yen was little moved today after the release of mixed economic numbers. The core machinery orders rose by an annualized rate of 0.9% in December. This was lower than the expected 4.8%. In November, the orders rose by 0.8%. On a MoM basis, the orders contracted by -0.1%, which was better than the expected contraction of -1.1%. In recent months, the Japanese economy has shown signs of slowdown.
On Friday, the EUR/USD pair reached a low of 1.1233 and started moving up. Today, the pair edged up slightly and is currently trading at 1.1315. On the hourly chart, the pair is above the 21-day and 42-day EMA while the RSI has moved to almost the overbought level of 70. It is also between the 23.6% and 38.2% Fibonacci Retracement level. Today, there is a likelihood that the pair will remain within these levels since traders don’t expect any major news.
The price of Brent crude oil remained along the three-month high level. The XBR/USD pair is now trading at the 66.17 level. On the daily chart, the pair is trading at a price above the 21-day and 42-day exponential moving averages. The RSI has moved closer to the overbought level of 70 while the signal line of the MACD remains above the overbought level. The pair will likely continue the upward momentum.
The USD/JPY pair was little moved in the Asian session. The pair is currently trading at 110.50, which is higher than Friday’s low of 110.23. It is lower than last week’s high of 111.13. The price is along the 21-day moving averages and along the middle line of the Bollinger Bands. The RSI has moved along the 50 level, while the money flow index has moved to almost the overbought level of 80. At this point, the pair could move in either direction.