Oil price spikes as OPEC+ agree to supply cuts extension
The Australian dollar rose even after trade data from China disappointed. According to the statistics office, exports declined by 3.3% in May after rising by 3.5% in the previous month. Imports declined by a whopping 16.7%, which was worse than April’s decline of 14.2%. Analysts polled by Reuters were expecting the imports to decline by 9.7%. As a result, the country’s trade surplus increased from the previous 14.2% to $62.9 billion. Still, there are signs that the trade situation is improving, which could bolster the Australian economy.
The price of crude oil rose by more than 2% after a successful OPEC+ meeting on Saturday. In the meeting, the members agreed to extend the 10 million barrels a day supply cuts until the end of July. Earlier on, there were concerns about whether these countries would agree to these cuts especially due to cheating by Iraq, Nigeria, and Kazakhstan. The new supply cuts will help boost oil prices at a time when the demand is slowly recovering.
The Japanese yen strengthened slightly even after the weak economic data from Japan. According to the statistics office, the country’s GDP contracted by 0.6% in the first quarter. Analysts polled by Reuters were expecting the contraction to come in at -0.5%. The economy weakened by 2.2% on a year on year basis. This contraction was mostly because of a 0.8% decline in private consumption and 0.2% decline in external demand. The two were offset by a 1.9% increase in capital expenditure.
The EUR/USD pair was little changed as the market continued to reflect on the upbeat US jobs data. The pair is trading at 1.1290, which is below Friday’s high of 1.1390. On the four-hour chart, the price is still above the 50-day and 100-day EMA while the RSI has moved below the overbought level of 70. It is also still above the Ichimoku cloud. Also, it is forming a small bearish pennant pattern, which means that it could continue declining as bears attempt to move below 1.1200.
The USD/JPY pair declined slightly after the country’s GDP data release. It is now trading at 109.43, which is slightly below last week’s high of 109.90. On the four-hour chart, the price is above the short and long-term moving averages while the RSI has moved slightly below the overbought level of 70. After completing the cup part of the cup and handle pattern, the pair seems to be attempting to form the handle. This could see it test the 61.8% Fibonacci retracement level at 107.70.
The XBR/USD pair rose to an intraday high of 43.35, which is slightly below the 61.8% Fibonacci retracement level. It is also slightly above the short and medium-term moving averages while the RSI has moved above the overbought level. The trend of XBR/USD is bullish as long as the price remains above the 50% Fibonacci retracement level at 39.25.