US dollar tumbles on weak jobless claims data
The price of crude oil dropped after hopes faded of a landmark deal to cut prices. Media reports suggested that Putin had rejected calls to talk to Trump and Mohammed Bin Salman on cutting production. This dampened the mood in the market since investors were already pricing-in supply cuts of 10 million barrels per day. Earlier reports suggested that Russia had agreed to 1.6 million barrels supply cuts. Still, there is a possibility that the two sides will reach an agreement. Also, the market will be watching for a meeting of G20 ministers that will happen tomorrow to deliberate oil issues.
The US dollar index declined after the Labour Department released the jobless claims data for the previous week. The number showed that more than 6.6 million Americans filed for unemployment benefits in the previous week. This was lower than the 6.8 million that was released last week. The figure today brings the total number of Americans who have filed for unemployment benefits to about 15 million. These are the worst jobless claims numbers ever reported. At the peak of the financial crisis, more than 700k Americans filed for the claims.
The euro eased today against major peers as the markets waited for the outcome of the Eurogroup meeting. EU’s finance ministers are meeting to deliberate on the best way to finance countries that have been affected by the coronavirus pandemic. The main differences are between northern countries like the Netherlands and southern states like Italy and Spain. The Northern countries are advocating for any funding to be tied to fiscal reforms while the southern countries have rejected this. The meeting is happening at a time when most EU countries expect to contract. In a statement yesterday, the German central bank said that the country could contract by 10% this quarter.
The EUR/GBP pair dropped to an intraday low of 0.8722, which is the lowest level since March 11. On the hourly chart, the price is below the 14-day and 28-day exponential moving averages. The price is also below the Ichimoku cloud. The signal and histogram of the MACD is slightly below the neutral line. This means that the pair may continue dropping and test the 23.6% Fibonacci Retracement level at 0.8570.
The XBR/USD pared earlier gains and dropped to an intraday low of 33.33. On the 30-minute chart, the price is along the 14-day and 28-day exponential moving averages while the Average True Range (ATR) has started to move upwards. The price has also fallen back to the channel that it was before today’s spike. The pair could see more volatility as more information on the OPEC meeting emerge.
The EUR/USD pair rose after the weak jobless claims data from the US. The pair is trading at 1.0937, which is the highest it has been since April 2. The price is along the upper line of the Bollinger Bands and slightly above the 14-day and 28-day moving averages. The RSI and the average true range indicators have also risen. The pair could continue rising, although a lot could change as Jerome Powell makes his statement.