Oil rises on Covid vaccine and weak US inventories
The New Zealand dollar rose sharply today after the country’s interest rate decision. The bank left the interest rate unchanged at 0.25%. It also left its large asset purchasing programme target unchanged at NZ$100 billion. Also, to support the economy, the bank said that it will launch a new programme that will provide cheap loans to companies in New Zealand. The kiwi rallied because the accompanying statement hinted that the bank will not move to negative interest rates as the governor had hinted before. An unconventional move like this would put pressure on the New Zealand dollar and the country’s banks.
European equities continued their strong rally as the market cheered a fall in Covid infections in some countries. The latest data in France, Germany, and Spain showed that new infections have started to fall. That coincides with news that a vaccine being developed by Pfizer and BioNTech was 90% effective. That means that the vaccine will start being administered in the next few months after it receives regulatory approval. Still, distribution is the biggest challenge considering that the vaccine will be transported in frozen containers. After arrival, it will be thawed and administered. Unfortunately, according to Bloomberg, it will go bad after five days.
The price of crude oil surged by more than 3% as traders react to the hopes of a vaccine and falling inventories in the United States. According to the American Petroleum Institute (API), US inventories declined by 5.1 million last week to 482 million barrels. Analysts polled by Reuters were expecting the inventories to fall by just 913,000 barrels. The official inventories data will come out tomorrow since today is a public holiday in the US.
The XBR/USD pair rose to an intraday high of $45.35 today. It is now at the highest level since September. Also, the price is above the envelopes indicator and all the short and medium-term moving averages on the four-hour chart. The Relative Strength Index (RSI), which is an important oscillator, has also risen to a high of 78.45, which is the highest it has been in months. Therefore, while the pair is likely to continue rising, a pullback to the support of 43.70 is also possible.
The EUR/USD pair dropped today mostly because of the overall weaker euro. It is now trading at 1.1783, which is also the lowest level yesterday. On the hourly chart, the price has moved below the 61.8% Fibonacci retracement level. It has also moved below the 25-day and 15-day exponential moving averages. The DeMarker indicator has also moved below the oversold level of 0.30. Therefore, the pair may continue falling, with bears aiming for the 50% retracement at 1.1760.
The NZD/USD pair rose to an intraday high of 0.6905 after the RBNZ interest rate decision. On the four-hour chart, the price is above the important resistance level of 0.6800. The price is also above all moving averages while oscillators have moved to the overbought level. Therefore, it seems like bulls have the momentum, which means that the price may continue rising. The uptrend will remain as long as the price remains above 0.6800.