CRUDE OIL PRICE JUMPS AS US-SAUDI TENSIONS RISE
The price of crude oil jumped during the Asian session after tensions between the US and Saudi Arabia emerged. Tensions started when a Saudi Arabian journalist entered the Saudi consulate in Turkey. Reports have since emerged that he may have been killed. During the weekend, the US president said that Saudi will have a price to pay if it is determined that they ended the journalist’s life. Soon afterwards, Saudi said that it will retaliate against the US. This was a major development because Saudi and the United States are close allies and Saudi is one of the biggest exporters of crude oil.
The USD strengthened even as the US president continued to criticize the Federal Reserve. In an interview with ’60 Minutes’, the president said that he was disappointed with the ongoing pace of interest rates. Since he became president, the Fed has raised interest rates seven times. It is expected to raise rates in December and a further three times during 2019. In recent weeks, traders have developed a fear of interest rates which led to the sharp market declines experienced a week ago. Today, traders will receive the US core retail sales.
Asian markets fell today as traders continued to worry about global growth and the impacts of the trade war. The Japanese Nikkei dropped by 1.30% while the Hang Seng and Shanghai dropped by 0.66% and 0.32% respectively. US futures too point to a lower open as traders expect for more corporate earnings. Bank of America, Rio Tinto, and Total will release their third-quarter earnings. They will follow JP Morgan, Citi, and Wells Fargo which released better-than-expected results on Friday.
Last week, the price of Brent crude oil reached a high of $86.59. It then started a sharp decline after increasing inventories and the price reached a weekly low of $78.98. In the Asian session today, the price jumped as traders started to worry about US-Saudi relations. It reached a high of $81.58. The RSI moved from a low of 22.73 to a high of 45 while the current price is along the middle band of the Bollinger Bands. It is likely that the XBR/USD pair will resume the downward trend.
The EUR/USD pair dropped sharply during the Asian session. It reached an intraday low of 1.1534, which was the lowest level since Thursday last week. Last week, the pair moved up in a near equidistance channel as the euro strengthened against the USD. The double EMA show that the pair could continue the downward trend on the 30-minute chart. If it does, the price will likely test the 38.2% Fibonacci Retracement level of 1.1500.
Last week, the weakness of the dollar led to a sharp rise in the GBP/USD pair. Today, the pair dropped sharply as the USD strengthened. It reached a low of 1.3080, which was the lowest level since Tuesday last week. On the thirty-minute chart below, the price is at the middle line of the Bollinger Band while the ADX is at 21. Today’s low was along the 50% Fibonacci Retracement level. It is likely that the pair will be slightly volatile today as traders pay close attention to the new developments on Brexit.