Crude oil price drops sharply as Middle East tensions deescalates
The price of crude oil dropped sharply as tensions in the Middle East appeared to cool-off. Yesterday, tensions appeared to escalate after Iran fired ballistic missiles to two American bases in Iraq. However, the attacks appeared to be cautionary as no American was killed. Analysts believe that Iran wanted to send a signal that it would respond while seeking to deescalate. In a statement, Donald Trump said that Iran appeared to be backing away. Meanwhile, data from the Energy Information Administration (EIA) showed that oil stocks rose in the past week. The stockpiles rose by more than a million barrels. This was after they declined by more than 11 million barrels in the previous week.
The USD was relatively unchanged after the market received the December employment data from ADP. Data showed that the economy added more than 202k jobs in December. This was much higher than the 160k that was expected. In addition, ADP revised its November data from 64k to 124k. The data from ADP tends to differ from the official number from the government. The Bureau of Labour Statistics will release the official numbers tomorrow. Today, Challenger will release the approximated number of job cuts in December. The Labour Department will also release the initial and continuing jobless claims.
The market will continue to focus on the Middle East. They will want to see whether there will be an escalation in the region. Traders will also receive some data from Europe. Germany will release its November export and import data. German exports are expected to have declined by 0.5% while imports are expected to have increased by 0.2%. From Switzerland, the market will receive the retail sales numbers for November. There will be a number of key corporate earnings today. Companies to watch will be L Brands, the owner of Victoria Secrets, KB Home, The Buckle, and Farmmi.
The XBR/USD pair declined sharply in overnight trading. The pair reached a low of 64.58 from the previous high of 70.65. The price is along the lower line of the Bollinger Bands and below the 14-day and 28-day moving averages. The RSI has moved from a high of 70 to the current low of 37. The signal line of the MACD has also moved below the neutral level. The pair may continue to see some volatility as the market continues to watch activities in Iran and the Middle East.
The EUR/USD pair was little changed after ADP released the November jobs numbers. The pair is trading at 1.1112, which is slightly above yesterday’s low of 1.1100. This price is below the December high of 1.1240. The price is below the 14-day and 28-day exponential moving averages. The Money Flow Index (MFI) has moved from a low of 9.6 to the current high of 44. The pair may remain at the current levels ahead of official jobs numbers.
The XAU/USD pair declined from a high of 1611.28 to a low of 1552.00. The price is above the two lines of the Envelopes indicator. The RSI has moved from a high of 88 to the current level of 50. The Average True Range (ATR) has continued to rise. The pair may continue seeing some volatility as the market watches the official jobs numbers tomorrow and the happenings in the Middle East.