Crude oil price falls on demand and supply concerns
The US dollar rose in overnight trading as traders reacted to impressive durable goods orders and the growing risks of coronavirus. According to the Bureau of Statistics, core durable goods orders rose by 0.8% in September, higher than the consensus estimates of 0.4%. The total orders rose by 1.9% while orders non-defence and air rose by 1.0%. However, according to the Conference Board, consumer confidence declined from 101.3 in September to 100.9 in October, mostly because of the uncertainties of the election.
The price of crude oil tumbled as traders reacted to the surging number of Covid-19 cases in the US and Europe. Yesterday, the US reported more than 74,000 new cases. Similarly, Germany confirmed more than 11k cases while Spain recorded more than 18,000 cases. The challenge is that demand will be subdued as more people stay at home at a time when supply from OPEC and other producers is rising. The price also fell because of the rising crude oil inventories. According to the American Petroleum Institute (API), the stocks rose from 584k to more than 4.57 million in the previous week. The EIA will release the official numbers later today, with analysts waiting for an increase of 1.23 million barrels.
The Canadian dollar is little changed ahead of the Bank of Canada decision that will come out later today. Analysts expect the central bank will leave interest rates unchanged and possibly hint at more rate cuts later this year or in 2021. Other important economic numbers to watch today will be the Swedish manufacturing and consumer confidence and retail sales. From the US, we will receive the mortgage market data and wholesale inventories. We will also receive important earnings from Visa, Mastercard, Boeing, Amgen, and Anthem, among others.
The EUR/USD pair moved below the important support at 1.1800 yesterday and is now trading at 1.1768. On the four-hour chart, this price is the lowest it has been since October 20. It is also significantly below the 15-day and 25-day exponential moving averages while the Relative Strength Index (RSI) has moved to the oversold level of 30. It is now forming a bearish consolidation pattern. Therefore, it seems like bears have prevailed, which will see the price continue falling.
The USD/CAD pair is little changed today as traders wait for the Bank of Canada rates decision. The pair is trading at 1.3190, which is slightly below the important resistance at 1.3200. It is also slightly above the triple exponential moving average and the short and medium-term moving averages. Also, the Stochastic oscillator has fallen while the Williams % range is pointing lower. Therefore, the pair may decline before the rates decision.
The S&P 500 index is down sharply in the futures market. It is trading at $3367, which is along the 50% Fibonacci retracement on the four-hour chart. The price is also below the declining trendline shown in green and below the 25-day and 15-day exponential moving average. It is also along the lower line of the Bollinger bands while the RSI has been falling. The index may continue falling as bears aim for the next support at $3300.