Global stocks declined as crude oil price continued to fall
Global stocks declined today as investors continued to react to low oil prices and weak corporate earnings. Yesterday, the price of US crude oil moved below $1 for the first time in history. The trend continued today as oil for June delivery fell to about $12. Brent crude also dropped below $20 for the first time in decades. While low oil prices are usually positive for the world economy, the current price brings default risks to the equation. Analysts believe that most oil companies in the US will go out of business if price per barrel remains below $20. In Europe, the DAX, FTSE, and CAC 40 declined by more than 2% while in the United States, Dow and S&P 500 futures dropped by almost 2%.
The British pound declined today as Brexit meetings got into their second day. The members hope to reach a deal on sensitive issues like trade, justice, competition, and fishing. Still, it is a race against time since the transition period said that the UK must decide whether it wants an extension by June 30. The market also reacted to weak jobs numbers from the UK. The data showed that the unemployment rate rose to 4.0% in February before the pandemic started. In the same month, wages with bonuses dropped from the previous 3.1% to 2.8%. This was the slowest rate of growth since 2018.
The Australian dollar declined today after the RBA released the minutes of the last meeting. The minutes described the rationale which members of the committee used to make decisions. These decisions included lowering interest rates, starting quantitative easing, and target for government bond yields. Still, the bank said that the recovery phase will take a longer period. It also committed to doing more to cushion Australians from the ongoing risks.
The AUD/USD pair declined to an intraday low of 0.6268 from yesterday’s high of 0.6397. As the pair dropped, it moved below the lower support of the triangle pattern. It also moved below the 23.6% Fibonacci Retracement level. Therefore, there is a possibility that the downward trend will continue until the pair tests the 38.2% retracement level of 0.6263. The pair may also move lower and retest the 50% retracement of 0.6211.
The GBP/USD pair dropped to an intraday low of 1.2300, which is along the 50% Fibonacci Retracement on the four-hour chart. The 25-day and 50-day EMA have made a bearish crossover while the RSI has moved to the oversold level of 30. The Stochastic Oscillator has also moved to the oversold zone. Therefore, the pair may continue moving downwards and possibly test the support of 1.2100, which is along the 38.2% retracement level.
The USD/CAD pair rose to an intraday high of 1.4267 as the price of crude oil dropped. This was the lowest it has been since April 6. The price is above the 50-day and 25-day moving averages and is slightly below the 50% Fibonacci retracement level. The pair may be starting a new trend as it attempts to test the YTD high of 1.46700.