Worsening demand due to the rising number of Covid-19 lockdowns in Europe caused the traders to sell oil heavily. We alerted TIOmarkets traders to the degrading technical picture yesterday (here) and had already warned on March 8th that oil had moved too fast and too high. It was our view then that a correction was in the cards. Slow vaccination programs in Europe also played a role in changing demand predictions and the fact that the Astra-Zeneca vaccine has been linked to blood clots made the oil bulls nervous. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.
The BOE kept the UK rates at 0.10% as was expected. Therefore, apart from some minor intraday swings, there were no big trading opportunities as a result of the announcement. The bank was slightly optimistic in its assessment of the UK economy and said that it will keep its stimulus program unchanged. Even though the yields in 10-year gilts have recently risen to one year high the bank didn’t see a need to react.
The massive jump in US Philly Fed Manufacturing Index (51.8K, 22.5 expected) signals that the Fed is correct in its assumption that the US economy is developing nicely. However, at the same time, the rising bond yields (+1.60% yesterday) make traders wonder if the Fed really can stick to the plan of keeping rates unchanged until 2023.
USD rallied strongly against the CAD in yesterday’s trading as the Canadian ADP Non-Farm Employment Change was a disappointment (-100.8K, -65.8K previous). Today’s main risk events are the BOJ press conference and the release of Canadian Retail Sales numbers (-3.0% expected). For more details on macroeconomic releases see our economic calendar.
Our USOIL analysis was spot on yesterday as we pointed to the fact that the market had created a lower high and we gave a level that the market is likely to move to. This morning European time oil is trading right at the zone indicated by our analysis. You can see the video here.
We said on March 8th (blue arrow) that the price of oil was not likely to go higher and could well retrace some of the recent rally. After yesterday’s drop, a trend reversal has now taken place and the previous support zone around 63.00 is a resistance. Another lower high looks likely after this would indicate even more downside. At the time of writing though the price of oil is bouncing higher. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.
Japan’s Nikkei index is trading lower today after the Bank of Japan decided the future ETF purchases will follow the wider Topix index only. Nikkei traders were bearish on the index already yesterday, creating a lower high and a bearish shooting star candle in the daily timeframe. Today Nikkei has lost almost 1% and has some way to go before the next important support area ( 29150 – 29300). Other key price levels are 27576, 28293, 30277 and 30714.
Recent macroeconomic data releases
- New Zealand GDP -1.0%, 0.2% expected
- Australian Employment Change 88.7K, 30.5K expected
- Australian Unemployment Rate 5.8%, 6.3% expected
- BOE Official Bank Rate 0.10%, 0.10% expected
- Canadian ADP Non-Farm Employment Change -100.8K, -65.8K previous
- US Philly Fed Manufacturing Index 51.8K, 22.5 expected
Important macroeconomic data releases today
- BOJ Monetary Policy Statement
- BOJ Press Conference
- Canadian Core Retail Sales -2.8% expected
- Canadian Retail Sales -3.0% expected
You may access the times and dates in the economic calendar here.
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Chief Market Analyst
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All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated.
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