Crude oil price jumps following IEA statement
The price of crude oil bounced back as the market reacted to the news on demand. In a statement, the International Energy Agency (IEA) said that a drop in demand will not be as severe as earlier anticipated. The France-based agency said that actions by governments to reopen the economies will lead to more demand for the commodity. The agency expects demand will fall by 8.6 million barrels a day, which is less than the previous estimate of 9.3m b/d. The price also reacted to a report by the EIA that showed that oil inventories dropped sharply in the previous week. That was the first decline since March.
The British pound was little changed today as the market reacted to an interview by Andrew Bailey, the new BOE governor. In an interview with Bloomberg, he said that the bank will not shift to negative interest rates as it deals with the coronavirus pandemic. His statement came a day after Jerome Powell, ruled out taking rates into negative territory. Negative rates are currently being used by the European Central Bank (ECB) and Bank of Japan (BoJ). Meanwhile, analysts expect that the bank will increase its 200-billion-pound quantitative easing in its meeting in June.
The US dollar was relatively unchanged after the Bureau of Labour Statistics (BLS) released the jobless claims data for the previous week. The numbers showed that more than 2.9 million Americans filed for unemployment benefits in the previous week. This number was higher than the 2.5 million that analysts were expecting. It was also the lowest reading in the past seven weeks. The number came at a time when millions of Americans have lost their jobs because of the pandemic. The unemployment rate has jumped to more than 14% and analysts at Goldman Sachs expect it to reach 20% this year.
The EUR/USD pair dropped to an intraday low of 1.0780 as the market continued to worry about the health of the European economy. Today’s low was the lowest it has been since Friday last week. On the hourly chart, the price has moved below the 23.6% Fibonacci retracement level. It is also below the 50-day and 100-day EMA while the RSI has moved to the oversold level. Therefore, the pair may continue falling as bears attempt to test the May 7 low at 1.0765.
The XBR/USD pair rose to an intraday high of 30.80 as the market reacted to the IEA report. On the hourly chart, the price has moved slightly above the 50-day and 100-day exponential moving averages. The price is also along the descending trendline shown in red. It is also slightly above the 23.6% Fibonacci retracement level. Therefore, a break above the red resistance could see the price attempt to retest the previous high of 32.35.
The NZD/USD pair dropped to an intraday low of 0.5960, the 50% Fibonacci retracement level, as the market continued to reflect on the interest rate decision. The 50-day and 100-day EMAs have also made a bearish crossover. Therefore, the pair may continue to fall as bears attempt to test the 38.2% retracement level at 0.5840.