RELIEF RALLY IN GLOBAL STOCK MARKETS AFTER DAYS OF TURMOIL

The price of crude oil stabilized after yesterday’s drop following the American Petroleum Institute (API) reporting a fall in inventories. The numbers showed that stores dropped by 1.545 million barrels in the past seven days. This was lower than last week’s build-up of more than 8 million barrels. The drop halted a sharp decline that started yesterday after Russia rejected Saudi Arabia’s request to increase production. Today, traders will watch out for the inventory numbers from the EIA, which are expected to show a build-up of 2.5 million barrels. This will be the lowest figure since September this year.

The euro was little moved today, even after Brussels continued its battle with Rome. The impasse between the two parties is about the budget, which was proposed by the new Italian government. A few weeks ago, the EU rejected the budget in an unprecedented move. Italy was then given a few days to change it and bring it to acceptable levels, a move which the government rejected. Today, Brussels said that Rome should face sanctions, which will lead to fines. The new approach by the EU will likely increase the possibility of Italy seeking an exit from the union.

World stocks recovered today after the carnage experienced in the past few days. In Europe, the DAX, Stoxx, and CAC rose by 70, 20, and 15 points respectively. This surge came after the Asian markets rose too, with the Shanghai Composite and Hang Seng gaining by 10 and 130 points respectively. US futures pointed to a major rally, with the Dow, Nasdaq and S&P gaining by 135, 50 and 20 points respectively. The new rally ends a few days of major losses that have seen investors’ wealth fall by trillions of dollars. It also comes a few days before a meeting between the US and Chinese presidents. In a report today, OECD said that global growth will ease from 3.7% this year to 3.5% in 2019 and 2020.

EUR/USD

The EUR/USD pair rose today to an intraday high of 1.1417. This was the highest level since yesterday. The current price of 1.1400 is along the middle band of the Bollinger Band and is above the important trendline shown below. After being in the negative, the Bulls Power indicator has started moving up. There is a likelihood that the pair will continue the upward trend. If it does, it will likely test the important resistance level of 1.1500.

XBR/USD

Yesterday, the price of Brent slipped sharply to a low of $61.92. This was the lowest level since February this year. Year-to-date, the price of Brent has fallen by more than 7%. From its YTD high of $86, it has fallen by more than 25%. On the daily chart, the moving averages of the XBR/USD pair show that the downward trend will likely continue. The RSI continues to be below 30, while the on balance volume continues to move lower after peaking at 7.4. The pair is likely to continue the downward trend.

XPD/USD

This year, palladium is the best-performing metal. It has gained by almost 10%. From its lowest level in August, the metal has gained by more than 30%. The XPD/USD pair is trading at 1148, which is slightly lower than the YTD high of 1183. It is also close to the important support of 1137. On the daily chart, the short and medium-term EMAs point to a continuation of the upward trend. This is confirmed by the Money Flow Index (MFI), which is currently at 56, after falling to 33.