WORLD MARKETS STABILISE AFTER A WEEK OF CARNAGE

The price of crude oil jumped today after the Energy Information Administration (EIA) slashed the global demand. The slow demand will be because of the current trade war and the increasing price of crude. This ended a two-day route that saw the price of oil drop by more than five percent. This was the sharpest decline in price since June this year. The declines this week started when the American Petroleum Institute (API) said that the inventories had jumped to 9 million barrels. EIA confirmed a jump in inventories but by a smaller margin than the API. Yesterday, its data showed the stocks at 5 million barrels. This was higher than the 2 million barrels of oil traders were hoping for. Another report showed that the world was consuming more than 100 million barrels of crude every day, which is a major milestone. The statement of the EIA said:

For many developing countries, higher international prices coincide with currencies depreciating against the US dollar, so the threat of economic damage is more acute.

The sterling fell sharply today after a report said that the BOE’s assumptions of Brexit remained doubtful. This ended a sharp rally that has been experienced by the sterling this week as hopes for a Brexit deal near. On Tuesday, it was reported that the UK and EU negotiators were nearing a deal. The report said that the compromised narrow deal was likely to be signed as early as Monday next week. If this happens, it will remove the risks of a hard Brexit. Theresa May has continued to rally conservatives to accept her Chequers proposal. She argues that it will be the best deal for the UK’s economy. Already, many European companies like BMW, Rolls Royce, and Airbus have warned that they might leave the UK in case of a hard Brexit. In an interview with Bloomberg today, the Chancellor of the Exchequer Philip Hammond said that the Brexit talks had accelerated in the past few days.

Global markets jumped today after two days of sharp declines. In Asia, the Hang Seng, Nikkei, and Shanghai ended the day higher by 2%, 0.60%, 0.91% while in Europe, the Stoxx, DAX, and CAC rose by 0.50%, 0.60%, and 0.60% respectively. In the US, the futures pointed to a higher open with the Dow, S&P, and Nasdaq gaining by 0.80%, 0.90%, and 1.31% respectively. These gains are mostly because of the inflation data released yesterday. The data showed that the inflation in the US rose by 2.3% in September, which was lower than the 2.7% traders were expecting. The dollar index too ended the recent slide by jumping more than 10 basis points. Today’s gains were also important because it was the ‘official’ beginning of the earnings season. Today, Citigroup, JP Morgan, and Wells Fargo are expected to release their third quarter earnings.

Chinese trade surplus with the United States continued to jump as the two countries engaged in a trade dispute. In September, the surplus jumped by more than $34 billion. In China, exports increased by an annualised rate of 14.5%, which was higher than the expected 8.9%. At the same time, imports jumped by a slower rate than traders had expected. Today, a report by the Treasury Department of the US showed that China was not manipulating the yuan. It was also reported that Donald Trump will meet with China’s Xi Jinping at the G20 summit at Buenos Aires in late November. Previously, the US had asked China to provide a list of concessions that it will offer the US at the summit.

XBT/USD

After the sharp decline in the past two days, the price of WTI crude oil jumped sharply to an intraday high of $71.87. This was after a report by OPEC lowered demand estimates. Its statement said that this low demand will be caused partly by the high price. Today’s lowest price was in line with the 50% Fibonacci Retracement level while the intraday high was at the 61.8% Fibonacci Retracement level. There is a likelihood that the pair will continue to decline as the low demand coupled with the increased supply affect the price.

XPT/USD

The price of platinum declined to a low of $755 in August. Since then, the metal has been moving up and today, it reached a high of $844. This was the highest level since August 1. The jump in the price of platinum was mostly because of the general weakness of the US dollar today. As shown on the four-hour chart below, the pair moved past the important support levels. There is a likelihood that the price will fall slightly as auto manufacturers continue to experience problems.

EUR/USD

The EUR/USD pair halted the sharp increase started earlier this week as traders focused on the IMF meeting in Bali. The pair reached an intraday high of 1.1610, which was almost in line with yesterday’s closing price. The pair is, however, seeing an upward momentum, which will likely continue. This is supported by the double Adaptive Moving Average (AMA) shown below. It is also confirmed by the RSI and the MACD indicators that are shown below.