Summary:
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Oil spikes over 2% higher on talk of Saudi output cuts
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EURUSD falls to lowest level since June; Below 1.13
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DE30.cash falls to test prior support around 11415
It’s been an eventful start to the new week with some large moves seen in several asset classes. First off, Oil has rallied more than 2% after Saudi Arabia heavily hinted at reducing their output in the not too distant future. The kingdom’s energy minister, Khalid al Falih said that market analysis amongst OPEC members showed that a 1m barrel a day output cut may be necessary from last month’s levels. It is clear that the organisation is keen to boost the price of crude after it fell into a bear market last week, with the remarks coming after comments over the weekend that the state energy giant Saudi Aramco would supply 500k less barrels a day in December due to lower demand.
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Oil has gapped higher this morning and moved back above the 70.20 swing level. Friday had seen price slip to a 7-month low but talk of output cuts from Saudi Arabia has thrown a possible lifeline to longs just as price slipped into bear market territory below 69.45 - as defined by a 20% decline from the recent peak of 86.75. Source: xStation
In the FX space there’s been a fairly broad move higher in the US Dollar which has seen the EURUSD fall to its lowest level since June and take out the prior support around the 1.13 handle. The most popular currency market has now negated a possible double bottom around 1.13 and in doing so opened up the possibility of further declines. The GBPUSD is also moving lower, having gapped down over the weekend as pressure mounts on UK PM May to revive her Brexit plan. There’s been positive noises coming out of Whitehall in recent weeks but the truth is that this has amounted to little more than empty rhetoric and significant barriers remain to a deal being reached. For instance, both sides seem reluctant to cede any ground on the Irish backstop and unless this happens then a deal will remain out of reach.
The EURUSD has made a potentially significant break below the 1.13 handle this morning as the market has fallen to its lowest level since June. Source: xStation
It’s been a soft start as far as equities are concerned with the DE30.cash falling back near last week’s lows around 11415. Despite a stronger recovery in the US in recent weeks, Europe has failed to make much headway higher and there is now a very real danger that prices are set to move lower and retest the October lows. The market has been range bound for the past couple of weeks from 11415-11690 but a break below these lows would be a negative development and open up a move towards 11050.
The DE30.cash is back near potentially key support at 11415 after some heavy selling in the past couple of hours. The market has been rangebound in recent weeks but a break below 11415 would open up a possible move back lower to the October low of 11050. Source: xStation
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