Crude oil and stocks slump after yesterday’s gains
US futures pointed to a sharp decline today. This comes after the sharp gains experienced yesterday when the Dow gained by more than 1000 points. The declines today come as traders continued to worry about the slowing global economy and corporate profits and the toxic political environment in the United States. On the latter, the government shutdown that started the previous weekend continued even as the US president made a surprise visit to Iraq.
After yesterday’s big jump, the price of crude oil declined today as traders continued to worry about a slowing global economy and increasing production. Most importantly, traders are worried that the production increase from the United States will be more than the announced cuts from OPEC members. In the recent OPEC meeting, the members agreed to reduce production by more than 1 million barrels, which investors believe did not go far enough.
The euro pared the previous gains after the European Central Bank (ECB) released the monthly economic bulletin. In the bulletin, the ECB officials said that they expect the economy to experience a slowdown in the coming year. This was not the first time the ECB has projected the economy to slow down. In the past monetary meeting, the bank lowered its economic forecast for the next two years. They blamed this on the current uncertainties on trade. Meanwhile, in the United States, the initial jobless claims rose by 216K, which was lower than the estimated 217K while the continuing jobless claims rose by 1,701K, which was worse than the expected 1,665K.
The XTI\USD pair declined to an intraday low of 45 from the previous highs of 47. On the daily chart, the current price is slightly below the 50-day and 25-day simple moving average while the RSI has fallen from the overbought level of 70 to the current 50. The price is also slightly above the 23.6% Fibonacci Retracement level. Regardless of the current decline, the pair could continue the upward momentum started yesterday.
The EUR\USD pair declined today after the grim projection by the ECB. The pair ended the sharp rally that started on December 14. On the hourly chart below, the pair’s current price is below the 28-day and 50-day simple moving average. At the same time, the William’s percentage range has fallen from the overbought level to near the oversold level while the Demarker is also declining. The pair could continue the current decline but in the next few days, it could experience some volatility.
The EUR\CAD pair declined slightly today after the ECB economic bulletin. The pair reached an intraday low of 1.5470. Still, the pair remains at elevated levels from the monthly lows of 1.5085. Also, the momentum indicator has remained at higher levels while the RSI has been declining. The pair appears to have reached a peaked after finding resistance close to the 1.5000 level.