OPEC’s Joint Ministerial Monitoring Committee meets today and is expected to keep production at current levels. This has given support to the price of Crude in today’s trading and has lifted the price beyond a historical resistance at $49.40, a swing low from February 4th 2020. The level was tested in December but sellers gained an upper hand and forced the price lower. Now the OPEC is expected to refrain from increasing the production of oil due to Covid-19 related fears. Germany reports 9847 new Coronavirus cases today and in the US the next few weeks are expected to be difficult says the leading US infectious diseases expert Anthony Fauci. As the virus has evolved and a new, more infectious strain is spreading the OPEC is expected to be cautious until there is evidence that the global vaccination program will have a significant impact. Vaccination of the global population has, however, only just started and it is expected to take at least six to nine months before a significant number of people is vaccinated. US stocks, oil and gold continue to trend higher while USD remains weak against its main competitors. Today’s risk events include the UK final manufacturing PMI, the OPEC meeting and Canadian manufacturing PMI. See our economic calendar for times and details. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

The price of Crude (USOIL) has broken out of a bullish triangle formation and has, as a result, rallied above the 49.40 resistance. The move has been attributed to bullish reports suggesting that the OPEC is likely to keep the oil production at current levels. The move higher suggests that oil traders believe in rising demand. A measured move from the triangle suggests that the price of oil could move to 50 dollars where Crude would be trading near the short term bullish channel high, a likely target level for intraday traders that are long after the breakout. The key support levels for USOIL are 46.15, 47.55, 47.80 and 48.95. The top of the short term price channel (blue) is currently at 50.20 and the medium-term channel top (grey) currently lies at 50.60. These are likely to be the most relevant price levels for oil traders in the near future. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts. 

USDCAD is trading at support level (1.2688) that was created in around the same time the USOIL failed to penetrate the $49.40 resistance. With the current anti-dollar bias in the markets and the strength seen in the USOIL a break below this support would not be a surprise. Should the USD attract buyers against the CAD around this support the key question would be: is there going to be follow-through in this buying? USDCAD would need to break out of the bearish regression channel which could be seen as evidence of a turnaround. The real test for the bulls is the 1.2769 resistance. The next key levels to focus after this are 1.2813, 1.2876 and 1.2956.

Recent macroeconomic data releases

  • BOE MPC Official Bank Rate Votes 0-0-9, 0-0-9 expected
  • BOE Official Bank Rate 0.10%, 0.10% expected
  • BOE Asset Purchase Facility Votes 0-0-9, 0-0-9 expected
  • Canadian ADP Non-Farm Employment Change 40.8K
  • US Philly Fed Manufacturing Index 11.1, 20.1 expected
  • US Unemployment Claims 885K, 817K expected
  • UK Retail Sales -3.8%, -.4.0% expected
  • German IFO Business Climate 92.1, 90.2 expected
  • Canadian Core Retail Sales 0.0%, 0.1% expected
  • Canadian Retail Sales 0.4, 0.1% expected
  • US Final GDP 33.4%, 33.1% expected

Important macroeconomic data releases this week

  • UK Final Manufacturing PMI, 57.3 expected
  • Canadian Manufacturing PMI, 55.8 previous
  • OPEC JMMC Meetings

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

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Janne Muta
Chief Market Analyst
TIOmarkets.com

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