CRUDE OIL PRICE JUMPS AHEAD OF KEY MEETINGS
The price of crude oil increased by more than 1% today ahead of key OPEC meetings. On December 6, OPEC leaders will meet in Vienna for the 175th ordinary meeting. In preparation for that meeting, another one will be held tomorrow. Oil bulls hope that OPEC, led by Saudi Arabia will start supporting the price. They will also be following closely the events in Buenos Aires, Argentina when the leaders of G20 meet. Most importantly, they will pay close attention to the outcome of the meetings between the leaders of Saudi Arabia, Russia, and the United States. While Saudi has proposed boosting production, the other two have proposed a continuation of the current production.
The euro rose against the USD today even after mixed data from Germany. The German ifo Business climate index declined to 102, which was lower than the consensus estimate of 102.3. It was also lower than the previously released 102.9. This reflects increasing worries over the global economy. Similarly, business expectations dropped to 98.7, which was lower than the estimated 99.2. In October, expectations were at 99.7. On a positive side, the current assessment number of 105.4 beat the consensus estimate of 105.3. The reason for the stronger euro was the Italian government backtracked on deficit spending. This is after a report said that the country’s leader was committed to lowering the deficit to 2.0-2.1%.
The sterling was little moved as Theresa May met her cabinet to deliberate about the deal that was passed by the European Union. It will be an uphill task for May because of the unpopularity of the deal. Labor has already indicated it will not support the deal. The party asked the two sides to extend Article 50 if parliament fails to support the deal. Many conservatives and May’s coalition partners have expressed an opposition to the deal. Today, a report by the National Institute for Economic and Social Research (NIESR) said that the country’s GDP will be 4% smaller in ten years if May’s plan is passed. Pro-Brexit argued that the report was biased because NIESR has campaigned actively for another referendum.
The EUR/USD pair moved slightly higher today after Italy committed to reducing its deficit. The pair is trading at 1.1365, which is higher than Friday’s close of 1.1326. On the hourly chart below, the pair is currently forming a symmetrical triangular pattern. The RSI has moved to 55, from Friday’s low of 17. All this has happened in low volumes trades. This is an indication that the upward trend could be a false breakout. If the upward trend continues, the pair will test the 1.1420 level. If it reverses, it will likely test the 1.1300 support.
The price of Brent rose by more than 1% today as traders eye important meetings this week. The XBR/USD pair reached an intraday high of 60.45. Still, the pair remains more than 20% from its YTD high of 86.45. The 30-day and 15-day EMA show that the pair could resume the downward trend. This is confirmed by the stochastic oscillator and the relative strength index as shown below. However, this week, this could change as traders receive important news from key OPEC leaders.
The GBP/JPY pair continued moving up today, continuing a trend that was started on Friday last week when the pair reached a low of 144.33. Today, it reached an intraday high of 145.56, which is an important resistance level as shown below. The 30-day EMA and the 15-day EMA continues to suggest that the upward trend will likely continue. This is confirmed by the RSI, which is currently at 67. The pair is likely to continue moving up. However, caution is needed because of the anticipated news from the UK about Brexit.