USD falls after sluggish data from the USA
The price of palladium rose today after a report by Platinum Group Metals said that the underlying industrial demand would pass the mine supply by about 1 million ounces. This deficit will be wider than the one experienced in 2018. This comes at a time when Russia’s stockpile of palladium is close to being exhausted. The demand for palladium has exceeded that of platinum as governments around the world impose stricter environmental standards especially after the Volkswagen emission scandal. The rise in price has made palladium more valuable than gold and is being targeted by thieves, who steal and sell it to scrap dealers.
The price of crude oil rose today as investors forecasted a steady rise in demand for the commodity this year. The rise happened despite the increase in inventories from the United States. Data from EIA showed that the inventories this week rose by 3.63 million barrels, which was higher than the expected 2.6 million barrels. The increase in US inventories was also likely priced in by the market. The rise in crude oil was also because of the reports that Donald Trump was open to extending the trade talks deadline. It was also boosted by positive Chinese data, which showed an increase in exports and imports.
The euro declined against the USD after lackluster data from Europe. In the fourth quarter, Germany’s economy grew by an annualized rate of 0.9%. This was in line with expectations. On a QoQ basis, the economy remained unchanged, which was relatively good because it avoided being in recession. The Wholesale Price Index (WPI) contracted by 0.7%, which was worse than the growth of 0.3%, which was expected. Meanwhile, in Switzerland, the PPI contracted by -0.5%, which was worse than the expected contraction of -0.2%.
In the United States, the data released today was bearish for the dollar. Retail sales contracted in December by -1.2%. This was worse than the expected growth of 0.1%. The core retail sales contracted by 1.8%. Investors were expecting the growth to remain unchanged. The PPI too rose by 2.0%, lower than the expected 2.1%. Initial and continuing jobless claims too were 239K and 1,773K respectively. This was higher than what investors were expecting.
Palladium started a major rally on August 16, when the price was at $830. Since then, the price has continued moving up and today, it reached a high of $1335. That is a 55% increase. On the daily chart, the price is above all the major moving averages. The 100-day EMA is at $1150. The RSI has continued to stay below the overbought level while the Williams Percent Range is along the overbought level. While the price will likely come down in the long-term, there is a likelihood that it will continue moving up in the short term.
The price of crude oil rose today as traders forecasted a rise in demand for the commodity. The price of Brent crossed the important resistance level of $63.75. On the four-hour chart, the pair was along the upper line of the Bollinger Bands. This is an indication that the price could continue moving up because the rise in US production has already been priced in. This is further confirmed by the On Balance Volume (OBV), which is rising and the RSI which has just tested the 70 level.
The EUR/USD pair rose shortly after the release of weaker-than-expected retail sales and jobless claims numbers. The pair rose to a high of 1.1310 after falling to a low of 1.1250. On the hourly chart, the price was along the 21-day moving average and lower than the 42-day EMA. The RSI has moved up to almost 50 while the Force Index has just crossed the neutral level. Even with the weak data from the US, the pair could resume the downward trend because of the weakness in Europe.