Global Stocks Calm Ahead of Earnings, Central Banks and Davos
|Global stocks were calm today as traders look ahead to a busy week. This week, traders will be focusing on the World Economic Forum (WEF) meeting that will take place in Davos. This is an annual meeting where the world elite gather to make deals and discuss topical issues. This year’s gathering will see more than 200 billionaires attend the forum. Donald Trump and a number of presidents and policymakers will also be attending. Traders will also be focusing on corporate earnings. Some of the big names that will be reporting are Netflix, IBM, and United Airlines. In addition, the market will receive interest rates decision from the ECB, BOC, and Norges Bank.
The price of crude oil rose today amid unrests in Iraq and Libya. The two countries produce a substantial amount of crude oil every day. Oil production in Libya was halted as armed forces closed a major pipeline from the country. In Iraq, the ongoing protests halted work at a minor oil field in the country. This is the second time that the market has been concerned over escalating tensions in the region following the US-Iran run-in. Meanwhile, Wood McKenzie, the energy research firm, released a report in which it projected that OPEC will extend cuts to the end of the year.
The British pound was relatively unchanged today mostly because no major economic data was released. There was also no major news from the United Kingdom. The currency has been on a downward trend against the USD since peaking at 1.3516 in December. Nonetheless, traders are increasingly bullish on the pound, according to a report by the Financial Times. According to the report, which was derived from the COT report, showed that fund managers and other companies reached their most bullish level since April 2018. They have been bearish about the sterling for the past two years. Speculators are also bullish the currency.
EUR/USD
The EUR/USD pair declined today after the German PPI of 0.1% missed consensus estimates of 0.2%. The pair dropped to a low of 1.1083, which was slightly below the important support of 1.1085. The price is below the 14-day and 28-day exponential moving averages while the RSI has been on a downward trend. The average true range indicator has been falling too. The pair may remain in a holding pattern as traders wait for the ECB decision on Thursday.
USD/CHF
The USD/CHF pair has been on an upward trend since January 6, when the pair was trading at 0.9613. The pair reached a high of 0.9690 today. This is above the 28-day and 14-day exponential moving averages. The RSI has remained unchanged slightly below the overbought level of 70. The dots of the Parabolic SAR indicator are below the price, which is a bullish indicator. The price may continue moving upwards as traders embrace the role of the franc as a safe haven.
AUD/USD
The AUD/USD pair dropped to a low of 0.6860, which was the lowest level since January 9. There was no single catalyst for today’s price action but traders could be worried about the impacts of the new SARS-like virus in China. The pair is trading along the lower line of the Bollinger Bands. It is also slightly above the 14-day EMA. If the pair continues to decline, the next support level to watch will be 0.6850, which is shown in yellow below.
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