Wall Street jumps after impressive start of earnings season
The price of crude oil rose today after Chevron announced that it will acquire rival Anadarko for $33 billion. This is the biggest purchase in the oil and gas sector since oil prices started to decline in 2014. This deal will strengthen Chevron’s position in the Permian Basin of Texas and New Mexico. In the statement, the company said that the deal will deliver cost savings of more than $2 billion a year. This deal comes at a time when global oil prices are gaining. This year alone, WTI and Brent have gained by more than 40% and 30% respectively.
Wall Street pointed to a higher open after the earnings season kicked off. JP Morgan, the biggest bank by assets released results that were better than expectations. Its net income was $9.18 and $2.65 per share. This was higher than the fourth quarter’s $8.71 billion and $2.37 billion respectively. Analysts were expecting an EPS of $2.35. In a statement, the bank’s CEO, Jamie Dimon said that the US economy had continued to grow, even with the ongoing global uncertainty. JP Morgan’s earnings were followed with those from Wells Fargo, which reported revenues of $21.6 billion, which were higher than the expected $21.01 billion.
The USD weakened slightly after data from China showed that the economy was improving. In March, the country’s exports rose by more than 14%, which was higher than the 7.3% that traders were expecting. At the same time, imports declined by 7.6%, which was way higher than the expected decline of 1.3%. In total, the country’s trade surplus increased to $32.65 billion, which was higher than February’s surplus of $4 billion. In Europe, the industrial production declined by 0.3%, which was a smaller decline than the -1% that traders were expecting. On a MoM basis, it declined by -0.2%, which was better than the expected decline of -0.5%.
The EUR/USD pair rose sharply after the better-than-expected industrial production data. It also rose because of the decision by the EU to start negotiating with the US. The pair is now trading at 1.1325, which is the highest level since March 27. On the hourly chart, the price is above the 25-day and 50-day moving averages. It is also along the upper line of the Bollinger Bands. The RSI has remained above the 70 level, while volumes too are rising. The pair will likely move higher, as it attempts to test the 1.1350 level.
The USD/JPY pair soared today and reached a high of 111.95. This was the highest level it has been since March 8. As shown on the four-hour chart below, this was a break-out from a major resistance level. The ADX indicator remains above 30, while the price is above the short and medium-term moving averages. The RSI too has reached the overbought level of 70. The pair will likely continue moving upwards to test the important psychological level of 112.
The XBR/USD pair rose to a high of 71.30 after the announcement by Chevron that it will acquire Anadarko. This price is closer to the YTD high of 71.70. On the four-hour chart, the price is above the 50-day and 25-day moving averages. The signal line of the Stochastic Oscillator has moved up to almost the overbought level of 80. With OPEC continuing to cut supplies, there is a likelihood that the price will continue moving higher.