Crude oil price rallies as vaccine hope offset virus fears
The price of crude oil bounced back in the Asian session as traders reacted to the rising hopes of a Covid vaccine even as the number of cases continued rising. In a statement overnight, one of the scientists behind the Pfizer and BioNTech vaccine said that life could return to normal in the next few months. Analysts believe that the vaccine will incentivise people to travel, which will lead to more demand for crude oil. The price also rose even as the US continued to add more rigs. On Friday, data by Baker Hughes showed that oil companies added 12 rigs in the previous week, bringing the total to 312. That was the ninth straight weeks of gains.
Global stocks rallied overnight even as the number of Covid cases surged in the United States. Dow Jones and S&P 500 futures are up by 0.75% and 0.73% while in Asia, the Nikkei 225 and Hang Seng are up by more than 1%. In the US, the number of cases reported yesterday was more than 159,121, which was slightly below Saturday’s record of 181,196. Analysts credit the current rally to the news by Pfizer that its vaccine was 90% effective and the likelihood that more companies will make a similar announcement in the near term. Also, there is a significant amount of ‘dry powder’, which is being allocated to stocks.
The Australian dollar rose slightly in the Asian session as traders digested the latest economic data from China. According to the Chinese statistics bureau, the fixed asset investment rose by 1.8% in October from 0.8% in the previous month. That increase was better than the expected 1.6%. The house price index rose by 4.3% while industrial production rose by 6.9%. In the same month, retail sales jumped to 4.3% from 3.3% while the unemployment rate dropped to 5.3%. These numbers matter for the Aussie because China is Australia’s biggest trading partner.
The AUD/USD pair rose to an intraday high of 0.7293. On the four-hour chart, the price has moved above the 14-day variable index dynamic average and the 61.8% Fibonacci retracement level. It has also moved above the important support level of 0.7245 while the signal and main line of the MACD are slightly above the neutral line. Therefore, for today, the pair will possibly continue rising as bulls aim for this month’s high of 0.7340.
The EUR/USD pair rose to an intraday high of 1.1852. On the four-hour chart, the price is slightly below the 61.8% Fibonacci retracement level. The upward rally is also being supported by the 14-day and 28-day exponential moving averages. The Relative Strength Index (RSI) has also moved close to the overbought level of 70. As the AUD/USD, the pair will likely continue rising, with the next target being 1.1880 and the support being at 1.1840.
The XBR/USD pair rose to an intraday high of 43.28. On the four-hour chart, this price is at the right shoulder of the head and shoulders pattern. It is also slightly below the envelopes pattern and slightly below the middle line of the Bollinger bands. Also, the RSI, which was previously dropping has started to rise. For today, the pair will likely continue rising as bulls aim for the next resistance at 44.00.