Markets Remain Calm as the Long Weekend Comes to an End

The price of crude oil jumped today after the United States announced that it will not extend the waivers on Iranian oil imports. The goal of the country is to bring the amount of crude oil exported by Iran to zero. Already, Taiwan, Greece, and Italy have ceased buying crude oil from Iran. Japan on the other hand has increased its purchases in anticipation of the expiry of the waivers. Others like China, India, and Turkey had hoped that the US would extend the waivers. Therefore, the expiry of the waivers will come at a time when the crude oil prices are at the highest level since November last year.  The price also rose after Donald Trump held talks with the Libyan warlord who is attacking Tripoli.

The Japanese yen was relatively unchanged in light trading today ahead of an important week that could redefine its course. This week, the Bank of Japan will deliver its fourth interest rates decision of the year. In the current conditions, the bank will likely leave rates unchanged at the currently negative level. In addition, the country will release more data. Tomorrow, investors will receive the manufacturing PMI and BOJ’s core inflation numbers. On Wednesday, they will receive the corporate price index and the all industries activity index. On Thursday, the country will release the foreign investments in Japanese stocks and on Friday, it will release the CPI, unemployment rate, industrial production, and retail sales data.

The Canadian dollar was also relatively unchanged against the USD ahead of the interest rates decision by the Bank of Canada. This will be the fourth rates decision this year and the likelihood is that the bank will leave rates unchanged. As with all the central banks, investors will be looking at the monetary policy statement to determine the direction of the monetary policy. In recent months, Canadian data has been weak. The headline CPI number declined from a high of 2.4% in November to the current 1.9%. The manufacturing PMI declined from a high of 57.1 in June last year to the current 50.5.

EUR/USD

The EUR/USD pair moved up slightly in a low-volume day. The pair is trading at 1.1247, which is higher than Friday’s low of 1.1235. On the hourly chart, the price is along the 50-day moving average and slightly higher than the 25-day EMA. The volumes remained subdued, which is expected because most markets have been closed since Friday. The signal line of MACD has moved slightly higher. This week, the pair could test the 38.6% Fibonacci Retracement level of 1.1270 before resuming the downward trend.

XBR/USD

The XBR/USD pair rose sharply today as the US moved to cut imports from Iran completely. The price of Brent, which is the global benchmark, reached a high of $73.75, which is the highest level since November last year. On the daily chart, the pair has formed a sharp V-shaped trend during this recovery. The price is above the 50-day and 100-day moving average while the 14-day Relative Strength Index (RSI) has remained above the overbought level. The present level is along the 61.8% Fibonacci level. In the short-term, the pair could retest the 50% Fibonacci level of $70, before resuming the upward trend.

USD/JPY

The USD/JPY pair has been unmoved for the past few days as traders wait for the BOJ decision. The price is trading at 111.93. This price is along the middle level of the channel. As such, the price is along the 25-day and 50-day moving average, while volume has declined. Therefore, the pair could continue to remain within this narrow range before a breakout in either direction happens.