Crude reaches YTD high as progress is seen in US-China talks
The price of crude oil rose in overnight trading even after the American Petroleum Institute (API) data showed increased inventories in the United States. Both the West Texas Intermediate (WTI) and Brent reached their highest levels this year. The numbers showed that inventories rose by 2.96 million barrels, which was higher than last week’s 1.9 million. Later today, the EIA will release the inventory numbers, which are expected to show a drawdown of slightly under 500K barrels. The recent rally has been fueled by the cuts by OPEC and Russia and a continued decrease in the US wells. Yesterday, it was announced that 3 countries, which were granted waivers to import from Iran, had cut their production to zero. The other countries are waiting for the deadline of the waiver in the coming month.
The USD index eased a bit after it emerged that China and the US had resolved most of the outstanding issues on trade. According to reports, the only major issue that is remaining is how to implement and enforce the agreement. After yesterday’s trip to China by a US delegation, the Chinese are in Washington this week for a potentially climactic negotiation session. The two main hindrances to a deal are the fate of US levies on Chinese goods and the terms of an enforcement mechanism demanded by Washington. The deal reached includes an increase in Chinese purchases of Chinese goods, measures to reign in on forced tech transfers, intellectual property theft, and measures for China to open up its economy to American firms.
The Australian dollar jumped after the country released impressive retail sales numbers. In February, retail sales rose by 0.8%, which was higher than the expected 0.3%. The trade surplus in the month increased to A$4.8 billion, which was higher than the expected A$3.7 billion. The currency was also boosted by impressive services PMI data from China. In March, the activity in the services sector increased to 54.4, which was higher than the expected 52.3. In February, it was at 41.1.
Today, traders will continue to pay attention to Brexit. Yesterday, Theresa May said that she will ask the European Union for another ‘short’ extension for Article 50. This is because Britain is scheduled to leave the European Union without a deal on April 12. The Uk will also release the services PMI data, which is expected to remain unchanged at 51.0. In the United States, traders will receive employment numbers from ADP. These numbers are expected to show an increase of 184K. ISM will also release the non-manufacturing PMI data.
After a few days of declines, the EUR/USD pair moved higher ahead of the employment numbers. The pair is now trading at 1.1225, which is higher than yesterday’s low of 1.1182. On the four-hour chart, this price is along the 25-day moving average and slightly below the 50-day EMA. At the same time, the signal line of the MACD indicator is moving high. However, this could be a false breakout, because of the significantly low volumes in the pair, which means that the downward trend could resume.
This year, the XBR/USD pair has been on a sharp increase and today, it touched the YTD high of 69.63. On the four-hour chart, the momentum indicator has remained above the 100 level while the pair remains above all the moving averages. The Accumulation and Distribution indicator has continued to rally. Therefore, there is a likelihood that the momentum will continue, with the next important level to watch being 70.
Yesterday, the AUD/USD pair declined sharply after the RBA interest rates decision. Today, the pair jumped after the release of impressive retail and trade data from Australia and the services PMI from China. The pair reached a high of 0.7105. This led the Relative Strength Index (RSI) to jump closer to the overbought level of 30. The pair’s price remained along the upper line of the Bollinger Bands. The pair could remain along these prices as traders wait for the US jobs numbers.