Crude price rises after API data shows falling inventories
Pound sterling continued to rise in overnight trading as traders grew confident that the country will avoid a no-deal Brexit. In a speech to Parliament yesterday, Theresa May said that she was prepared to ensure that the country avoided a scenario where a deal wasn’t agreed. In recent days, the Prime Minister has been under intense pressure from members of her own party. Pro-EU Conservatives had threatened to resign in protest of a no-deal Brexit. This decision came after a secret government report showed that the country’s economy would be significantly affected in case it leaves without a deal. Today, traders will continue to focus on the progress of these talks.
Yesterday, the Fed chair testified before Congress and reaffirmed his previous views that the economy was doing well. However, he reiterated the views of the central bank that the world economy faced significant risks. He talked about the slow growth in China and Europe and the continued risks of a no-deal Brexit. He also repeated that the bank will take a patient approach to interest rates. Today, he will continue to testify before congress.
The price of crude oil rose slightly after data from the American Petroleum Institute (API) showed slowing inventories from the US. In the past week, inventories declined by 4.2 million barrels. This was after a 1.26 million barrels increase in the previous week. Later today, the EIA will release its inventories data that’s expected to show an increase of 2.842 million barrels. This will still be lower than last week’s increase of 3.6 million barrels.
The EUR/USD pair rose after yesterday’s Fed chair statement. The pair reached an intraday high of 1.1400. This was a higher level than the 21-day and 42-day moving averages. The RSI has moved close to the overbought level of 70 while the ADX is at 21. The pair could remain along these levels since there is no major expected economic data.
The price of Brent crude rose from this week’s low of $64.50 to a high of $65.70. On the four-hour chart, the pair’s price is slightly below the 21-day and 42-day moving averages. After falling to the oversold territory, the RSI has moved up to the current level of 46 while the Relative Vigor Index (RVI) is edging closer to the neutral level. The pair could continue moving upwards because even with Trump’s tweet, nothing fundamental changed about the oil market.
The GBP/USD pair remained close to the YTD high of 1.3288 as traders waited for the next action by Theresa May. On the daily chart, the pair is above all the short and medium-term moving averages. At the same time, the RSI has moved close to the overbought level of 70. The pair’s movements today will depend mostly on the statements that emerge concerning Brexit.