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Crude Oil bounce back after 7-year low

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Yesterday’s RBA (Reserve Bank of Australia) minutes had only a slight impact on the AUD/USD trend, moving the major 10 pips up in a neutral position. In terms of technical analysis, the price has the support at the 100 SMA (Simple Moving Average) meaning 0.7236 going towards the 200 SMA resistance at 0.7265, but recovering from 0.7160.

RBA’s minutes revolved around the CPI (Consumer Price Index), the bank stating that the economic outlook might make room for a further policy easing as the Aussie is pushing up domestic business demand. The statement continued saying that outcomes were positive, generally speaking, with the 2% rate policy, expectations being of a gradual output strengthening over the course of the next 2 years. Also, house prices were released yesterday, showing that the data is at par with expectations at a 2% mom (month-on-month) and over predictions at 10.7% YoY (year-on-year).

The UK CPI for November remained at October’s figure although there was an -0.1% expected fall. The YoY value for CPI came in at 0.1% in November, the same as the markets expected and over October’s -0.1% YoY. The rate increase is supported by the rise in transportation costs, tobacco, and alcohol, although it was balanced by the fall in clothing prices.

In the US, the Bureau of Labor Statistics reported yesterday also an unchanged CPI for the month of November, on a seasonally adjusted basis although. Before the seasonal adjustment, officials say there was a 0.5% index increase in November on a YoY basis. The setback was due to the decline in the energy and food sector, with the energy index going down 1.3% (all of the major sub-indexes declining, except electricity), while the food index suffered a 0.1% shortage due to smaller figures in five of the six benchmarks in the major grocery store food group.

As for the black gold, it registered a modestly advance yesterday, extending its recovery from the 7-year lows and closing the second day in a row on the gain. Oil prices managed the slight recovery although the global glut concern and Fed’s meetings and discussion over the rate hike made investors eerie and prices capped.

The West Texas Intermediate (WTI) barrel went up to a session high of $37.88 before closing the day up by 2.9% at $37.35/barrel, bouncing back from the 7-year low $34.53 registered on Monday. Futures contracts on oil went down roughly 15% since the 4th of December, the date marking OPEC’s (Organization of the Petroleum Exporting Countries) decision to refuse an output cut on behalf of prices.

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