WTI surges to one month highs, whilst USD remains vulnerable

Global Market

WTI bulls gained inspiration during Tuesday’s trading session when US government data suggested that the global oil supply glut could be diminishing. This unexpected news resulted in the commodity not only advancing $2 but achieving its highest value in over a month at $49.00. This stronger oil price should provide strength to currencies with export linked commodity exports. Despite the inspiration gained by WTI bulls, the global themes concerning the decline in commodity prices, the slowdown in Asia and continual concerns over the pace of growth in Europe and Japan have not changed. Any elevated concerns over the global economy may lead to fears that there will be less demand for oil, which could act as a major catalyst to quell any upside momentum.

Economic data released in early October from the United States offers a valid reason for the Fed to hold off a US rate hike until 2016. Dollar weakness continues to be the theme that runs the global currency markets. Anxious market participants have reduced their bets on a 2015 US rate hike, which has exposed the USD to vulnerability throughout the currency markets. With sentiment turning bearish on the Dollar, the USD index may decline to the next relevant support based at 94.00.

It seems that the increasing speculation that further monetary stimulus is on the way from China has led equity markets higher at the beginning of the week. Although the China markets are closed for the week-long national day holiday, speculation is mounting that the PBoC are about to unleash further stimulus, and this could result in a sharp bounce when the Shanghai Composite Index reopens. While the global equity markets suffered throughout the previous quarter, they have begun the final quarter far more positively and are currently recording strong gains.

USDZAR

The USDZAR remains technically bearish on the daily timeframe as long as prices can keep below the 14.050 resistance. Prices are trading below the 20 Daily SMA and the MACD has crossed to the downside. The next relevant support is based at 13.200.

USDTRY

The USDTRY is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD is in the process of crossing to the downside. Previous support at 2.990 may become dynamic resistance which should aid a move to the next relevant support based at 2.900.

GBPAUD

This pair remains technically bearish on the daily timeframe. Prices have breached the 2.1400 support with the next relevant support based at 2.1100. Prices are trading below the 20 SMA and the MACD has crossed to the downside.

GBPCAD

The GBPCAD remains technically bearish on the daily timeframe as long as prices can keep below the 2.0100 level. The next relevant support is based at 1.9500. Prices are trading below the 20 Daily SMA and the MACD has crossed to the downside.