WTI crude oil prices climbed for a third day to US$ 42.00, riding the tailwinds of election results, encouraging vaccine news, and a large-than-expected draw in US inventories. The world’s largest pharmaceutical company Pfizer announced earlier this week that its Covid-19 vaccine showed a 90% success rate in an interim analysis of its phase 3 clinical trial. The major vaccine breakthrough raised hopes for a faster pace of economic recovery and thus brightened the prospects for energy demand. Stock markets were starting to price in the potential impact of a successful vaccine, with investors rotating out of tech stocks into energy, industrial and other cyclical sectors. A much larger-than-expected fall in US crude stockpiles also helped to boost energy prices. According to the American Petroleum Institute (API), US crude inventory fell by 5.15 million barrels in the week ending November 6th, compared to a 0.89-million-barrel estimate. Gasoline and diesel stockpiles also decreased. In the previous week, API reported a 7.99-million-barrel draw, which contradicted forecasts calling for a 0.89 million rise. A tepid demand outlook may limit oil’s upside, however, as a new round of lockdown measures in many European countries and tighter border controls may point to further weakness in energy demand. Even if Pfizer’s vaccine is proven successful, it may still take several months before it becomes publicly available.
EUR/USD trade sideways within a 1.1790/1.1880 range. EUR traded between 1.1778 and 1.1843 before closing little changed at 1.1814 . Momentum indicators are mostly neutral and further sideway-trading would not be surprising, although likely at a lower range of 1.1775/1.1855. The current movement is viewed as the early stages of a consolidation phase even though the slightly soft underlying tone suggests EUR is likely to edge lower towards the bottom of the expected 1.1720/1.1880 range first.
GBP /USD trade between 1.3120 and 1.3220’ was wrong as it blew past 1.3220 and hit an overnight high of 1.3278. While the rapid advance appears to be running ahead of itself, robust upward momentum suggests GBP could strengthen further to 1.3300, with lower odds for extension to 1.3330. On the downside, a break of 1.3190 (minor support is at 1.3220) would indicate the current upward pressure has eased. Further GBP strength appears likely even though it is a bit too soon to expect a move to the year-to date high at 1.3481. On a shorter-term note, 1.3380 and 1.3420 are already quite strong resistance levels. All in, the current GBP strength is deemed as intact as long as it does not move below 1.3120 (‘strong support’ level was at 1.3065 yesterday).
USD/JPY remains on the upside as rebound from 103.17 should target 106.10 resistance. Decisive break there should confirm completion of fall from 111.71 and turn outlook bullish for further rally. On the downside, break of 104.57 minor support will turn bias back to the downside for 103.17 low instead.
The Aussie Dollar started a strong rise from the 0.7050 swing low against the US Dollar. AUD/USD broke the 0.7120 and 0.7200 resistance levels to move into a positive zone. The pair climbed above 0.7300 and traded as high 0.7339. Recently, there was a minor downside correction, but the pair remained stable above the 0.7250 and 0.7240 support levels. The main support is now forming near the 0.7200 level, below which the pair could decline towards the 0.7120 support level and the 100 simple moving average (4-hours). On the upside, the pair is facing hurdles near 0.7320 and 0.7340. A clear break above 0.7340 could open the doors for a push towards the 0.7400 resistance.
USD/CAD is staying in consolidation from 1.2928 temporary low and intraday bias remains neutral first. With 1.3097 resistance intact, further decline is expected. On the downside, break of 1.2928 will extend larger decline to 61.8% projection of 1.4667 to 1.2994 from 1.3389 at 1.2355. On the upside, however, firm break of 1.3097 will indicate short term bottoming and turn bias to the upside for stronger rebound.
Technically, the near-term trend of WTI crude oil prices has turned bullish last week. The prices have penetrated through key resistance at 41.50 and thus have opened the room for further upsides with an eye on US$ 43.80 – a key resistance level. The MACD indicator has formed a “Golden Cross”, showing strong upward momentum. An immediate resistance can be found at around US$ 42.5 – the upper Bollinger Band.
Following heavy losses on Monday, gold prices paused losses on the critical 1848 – 1863 support zone. This has also placed the bearish ‘Death Cross’ back in play on the daily chart below. Positive RSI divergence shows that downside momentum is fading in the yellow metal. This could precede a turn higher towards the 20-day and 50-day Simple Moving Averages.
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