Oil prices continue to rally

USD continues to gain in the FX market

The USD continued to gain in the FX market yesterday, as uncertainty was enhanced among market participants and continued to stoke worries for inflationary pressures in the US economy and thus a continuance of a tight monetary policy by the Fed. We highlight the release of the US ADP national employment figure later today as well as the ISM non-manufacturing PMI figure, both being for February should the readings rise, we may see further support building up for the greenback.

Trump’s big tech meeting and Apple event eyed

The uncertainty in the markets, caused by the widening of the US-Iranian conflict, weighed on US equities yesterday. Overall should the risk off market sentiment be maintained we may see US equities retreating further. Market interest may be placed on the White House meeting of US President Trump with major US tech companies and a positive result could boost market sentiment somewhat while Apple’s share price could be swayed by the last day of the Apple Experience. 

Oil prices continue to rally

Oil prices continued to rally yesterday as the US-Israeli war in Iran is ongoing disrupting shipping and oil production in the area. It’s characteristic that Iraq, has reduced oil production output by 1.5 million bpd, while worries exist for a total halting of Iraqi oil production, which in turn could choke the supply side of the international oil market. Overall we see the case on a fundamental level for market worries about a tightening of the oil market to continue to tantalize oil traders, at the current stage, which could boost oil prices further. 

Gold’s price interrupts its upward movement

Gold’s price retreated, as despite market uncertainty creating safe haven inflows for the precious metal, the strengthening of the USD, given market worries for inflationary pressures and a possible delay in the expected easing of the Fed’s monetary policy, weighed on gold’s price on a fundamental level. The overwhelming of the safe haven tailwinds for gold tends to raise some eyebrows for the continuance of it upward motion.

Other highlights for today

Today we get the February CPI Rates for Switzerland and the Czech Republic, Euro Zone’s and the UK’s final composite and services PMI figures for February and from the US the weekly EIA crude oil inventories figure. On a monetary level, we note that ECB Vice President De Guindos and BoC Governor Tiff Macklem are scheduled to speak. In tomorrow’s Asian session, we get Australia’s trade data for January.

Charts to keep an eye out

WTI’s price continued to rally yesterday and during today’s Asian session, breaching the 76.60 (S1) resistance line now turned to support. We maintain our bullish outlook for the commodity’s price yet also issue a warning that it is at overbought levels and ripe for a correction lower as the RSI indicator is above the reading of 70, and the price action is considerably above the upper Bollinger band. Should the bulls maintain control, we may see WTI’s price aiming if not breaching the 80.00 (R1) resistance line. Should the bears take over, we may see WTI’s price breaking the 76.60 (S1) support line and continue to break also the 73.35 (S2) level.        

XAU/USD dropped yesterday testing the 5120 (S1) support line. The precious metal’s price action broke the upward trendline guiding it, signalling an interruption of the upward movement thus we switch our bullish outlook in favour of a sideways motion bias for now. Should a bearish outlook emerge, we may see gold’s price breaking the 5120 (S1) support line and start actively aiming if not breaching also the 4830 (S2) support level. For a bullish outlook to be readopted we would require a clear breaking of the 5600 (R1) resistance line, which is also a record high level for gold’s price.

WTI daily chart

• Support: 76.60 (S1), 73.35 (S2), 70.00 (S3).
• Resistance: 80.00 (R1), 83.85 (R2), 87.10 (R3). 

XAU/USD daily chart

• Support: 5120 (S1), 4830 (S2), 4550 (S3).
• ·Resistance: 5600 (R1), 6000 (R2), 6500 (R3).