Crude oil price falls as demand problems persist
The New Zealand dollar rose today after the government announced that it would extend the total lockdown for one more week. In a statement, the prime minister said that the lockdown was necessary to help the country deal with the current pandemic. Earlier on, data from the country showed that the rate of inflation jumped by 0.8% in the first quarter. This was slightly higher than the 0.4% that analysts were expecting. It was also higher than the previous quarter’s increase of 0.4%. The CPI rose by 2.5% on an annualized basis in the quarter.
The price of crude oil dropped today as the market continued to worry about demand. The price of US oil dropped to a 20-year low of $15 per barrel. Brent, on the other hand, dropped by more than 3% to $27. The main concern in the oil market is that the current supply cannot sustain the demand. For example, according to Reuters, oil storage tanks in the United States have been filling up. Another reason is that the May expiration dates for US oil futures are tomorrow. Historically, the price of oil tends to drop before this.
European equities turned lower as investors reacted to the news from Spain. In an update to the market, the Bank of Spain said that the economy shrank by 4.7% in the first quarter. The bank also said that the economy would shrink by about 12.4% this year. Further, the bank said that this slowdown would lead to significant joblessness. It forecasts that the unemployment rate would rise up to 21.7% this year. This would worsen an already dire situation in a country where the rate of unemployment stands at 14%. All this will happen because Spain is overly exposed to the tourism sector. Other EU countries like Germany and France see double digit hits on the GDP in the second quarter.
The EUR/USD pair wobbled today on the devastating news from Spain. The pair is now trading at 1.0865, which is slightly lower than the day’s high of 1.0897. On the hourly chart, the price is along the 50-day and 25-day exponential moving averages while the average true range has been falling. The price has also been moving in a sideways direction. The pair may remain in the current holding pattern since there is no major data expected today.
The XBR/USD pair declined to an intraday low of 29.50, which is close to its lowest level since the beginning of the month. On the hourly chart, the price has formed a triple bottom pattern at the 23.6% Fibonacci Retracement level. Also, the price is slightly below the short and medium-term moving averages. Therefore, the price is likely to remain to be bearish if it can break below the support of 29.45.
The NZD/USD pair rose to an intraday high of 0.6077, which is its highest level since April 15. On the hourly chart, the price has shifted lower to the 61.8% Fibonacci Retracement level. It has also moved above the short and medium-term moving averages. At the same time, the price has formed an inverted hammer followed by three white soldiers pattern. This means that the pair may continue moving lower today.