The price of crude oil pared early gains as the market digested news on the deal signed between oil producers. Last week, members of OPEC+ signed a deal that will see them reduce production by more than 9.7 million barrels. The deal was accepted by other G20 members, who agreed to also cut production in response to low demand. Perhaps, the reason why oil prices declined was that investors are worried about lack of demand as more people stay at home. In response to the price action, oil currencies like the Canadian dollar and the Swedish krone fell by more than 50 basis points.
The euro declined slightly today as the market reacted to news that European leaders had reached a financing deal. The deal, which was reached on Friday, will see many European countries get financing from the European Stability Mechanism (ESM). Some investors have started to predict the next European debt crisis. In an editorial, Wolfgang Wunchau, hypothesised that the crisis could start when one of the leading southern countries like Spain or Italy defaulted on their obligations.
US futures declined today as the market prepared for the start of the earnings season tomorrow. This season is of increased importance because investors will want to see how the coronavirus pandemic affected corporate earnings in the first quarter and how companies are guiding for the coming quarters. The companies to watch tomorrow will be Wells Fargo, Johnson & Johnson, Citigroup, and JP Morgan. Other companies to watch this week will be Goldman Sachs, Morgan Stanley, and Bank of America.
EUR/USD
The EUR/USD pair declined to an intraday low of 1.0900 as the market started to question the debts of certain countries. On the 30-minute chart, the pair is trading at the lowest level since April 9. The price is also below the 14-day and 28-day exponential moving averages while the RSI has been falling. The money flow index has also been falling. The pair could move lower and possibly test the important support level of 1.0850.
XBR/USD
The XBR/USD pair declined to an intraday low of 32.03 as the market shrugged-off the latest OPEC+ deal. The pair is trading below the short and medium-term moving averages while the Stochastic oscillator has moved to the oversold level. The RSI too has been falling. The pair could continue being relatively volatile as the market digests the deal signed over the weekend.
XAU/USD
The XAU/USD pair edged higher as the market waited for the earnings season. The pair rose to a high of 1695.33, which is close to its seven-month high. The price is also above the 25, 50, and 100-day exponential moving average on the four-hour chart. The RSI has also been rising, and is currently above the overbought level of 70. The signal line of the MACD has also remained above the neutral line. The index could continue to rally ahead of the earnings releases.
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