US stocks rise ahead of a busy earnings week
The price of crude oil pared early gains as investors continued to pay attention to the geopolitical issues in the Middle East. Over the weekend, Iran announced that it had seized a British oil tanker that clashed with a fishing boat. While there was no major news from the region today, analysts at Morgan Stanley released a report that said that oil price will remain ‘relatively benign’. The note said the following.
The history of fear around the Strait of Hormuz suggests that from time to time, this concern can flare up and we can have some disruptions but they rarely last for very long. There is a difference in the oil market this time around because non-OPEC is simply growing so fast. That is the real game changer and that’s why the price action is relatively benign.
US futures rose slightly today ahead of the busiest week of the quarter. This week, hundreds of large companies in the US will release their earnings. These earnings will come a week after the 5 large banks in the US released their earnings. In total, these banks made a record profit of more than $30 billion. The top companies that will report this week are Tesla, Google, Boeing, General Motors, and Caterpillar. The S&P 500 futures rose by 10 points before the market opened.
The sterling declined today as the UK prepared for its new prime minister. The voting members of the conservative party will conclude voting this week. It is widely expected that Boris Johnson, the controversial former Mayor of London will be the next PM. Boris has said that he will take the country out of the EU with or without a deal. In anticipation of this, the Chancellor of the Exchequer, Philip Hammond said that he will resign if Johnson becomes the leader. Today, Alan Duncan, the Foreign Affairs minister resigned.
The GBP/USD pair declined sharply from a high of 1.2510 to a low of 1.2454. The pair then pared some of those losses and is currently trading at 1.2473. On the hourly chart below, the pair is below the 25-day and 50-day exponential moving averages. The RSI has moved from the oversold level of 30 to the current 40. The pair could turn out to be volatile this week depending on who will be the next prime minister.
The EUR/USD pair was relatively unmoved today and is currently trading at the 1.1216 level. On the hourly chart, the pair is trading along the middle line of the Bollinger Bands while the accumulation/distribution indicator has been on an upward trend. The momentum indicator is along the important line of 100. The pair will likely remain in a holding pattern as investors wait for the ECB decision.
After rising sharply in the morning session, the XBR/USD pair pared some of the gains as traders continued to observe the Iranian issue. Today, Iran also announced that it had arrested and sentenced some CIA spies in the country. On the hourly chart, the pair is trading along the 50-day and 25-day EMA. The RSI has moved lower to the current level of 50. The price will likely continue being volatile in the American session.