Oil headed lower just as we expected it to and now it is trading just above our first target zone. The fall was caused by profit-taking after the reality of rising Covid-19 infections started to weigh on this market. In addition, the International Energy Agency (IEA) reported yesterday that global oil demand is unlikely to benefit from the vaccines until well into 2021. US Congress didn’t make any progress on stimulus negotiations as Senate Republican Leader Mitch McConnell called for a $500 billion package. His preference is for a considerably smaller package than the $2.2 trillion stimulus demanded by Democratic House Speaker Nancy Pelosi. This dampened the enthusiasm to buy shares in the US yesterday and has made buyers in Asian markets also more careful. The unemployment claims from the US were a slightly positive surprise with 709K new claims instead of 730K expected by the analyst consensus. The main risk events today include the PPI numbers and the University of Michigan consumer sentiment release. We’ll also have the BOE governor speaking. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

We suggested in yesterday’s Price Action Analysis video that WTI Crude should move lower and gave two target zones. T1 zone at 39.46 – 40.06 and T2 zone at 38 – 38.60. The price of oil has traded almost to this level with the lowest low only 0.08 dollars above our T1 zone. In practical terms the target was reached. Price is trading near a rising trendline it found support on. This could lead to further buying. Resistance levels are now at 41.30 and 42.16 and support levels are at 39.50 and 40.14.

AUDUSD is another market that has almost hit our T1 zone. The pair had been making lower highs and forming a triangle formation from which it has now broken out of. The price has missed our target by only 3 pips which makes this yet another market that has practically reached the target zone. The resistance is still fairly near so the upside is likely to be limited and should mean  there’s more downside potential in this market. Nearest support and resistance levels are 0.7252 and 0.7252. For more analysis on this and many other markets, you may want to subscribe to TIOmarkets YouTube channel.

Recent macroeconomic data releases

  • Federal Funds Rate <0.25%, <0.25% expected
  • Canadian Employment Change 83.6K, 59.0K expected
  • Canadian Unemployment Rate 8.9%, 9.0% expected
  • US Average Hourly Earnings 0.1%, 0.2% expected
  • US Non-Farm Employment Change 638K, 595K expected
  • US Unemployment Rate 6.9%, 7.7% expected
  • New Zealand Official Cash Rate 0.25%, 0.25 expected
  • US CPI 0.0%, 0.1% expected
  • US Core CPI 0.0%, 0.2% expected
  • US Unemployment Claims 709K, 730K expected

Macroeconomic data releases today

  • US Core PPI 0.2% expected
  • US PPI 0.2% expected
  • Prelim UoM Consumer Sentiment 82.1 expected
  • BOE Governor Bailey Speaks

You may access the times and dates in the economic calendar here.

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Trade Safe!

Janne Muta
Chief Market Analyst

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