CRUDE OIL, US DOLLAR, OPEC+, AUD, NZD, USD/JPY, USD/CHF - TALKING POINTS:
- Crude oil prices slipped as USD strengthened amid a bout of risk off.
- APAC equities moved lower with Japanese equities leading the way.
- Energy commodities maintain elevated volatility. Where to for WTI crude?
Crude oil fell over 3% with the WTI futures contract trading below US$ 76.00 from a close in New York of US$ 78.39. The OPEC+ meeting this Thursday will meet to discuss levels of output.
In Asia today, the US Dollar soared against risk assets as a new strain of coronavirus has been identified by the World Health Organisation.
Several countries have banned flights from a number African countries in the south of the continent. This is at a time when the market is looking at the Fed to speed up the pace of tapering. These tightening expectations might be reviewed.
G-10 government bond yields fell everywhere and across all of the curve as the market ran for cover. Assets perceived as safe havens were sought out, as risk aversion took hold.
The growth linked Australian Dollar moved lower despite positive data being released. Australian retail sales came in at 4.9% for October against expectations of 2.2% and a prior read of 1.3%. However, it wasn’t enough to move the dial of the markets’ perception of the RBA’s tightening timeline.
The New Zealand Dollar was also under pressure even though we heard hawkish rhetoric from RBNZ Assistant Governor Christian Hawkesbury.
Equities were hit hard with Japanese stocks taking the brunt of the stampede for the door. The Nikkei 225 index was down 3% at one stage. The main indices from Australia, China, Hong Kong, New Zealand and South Korea were all down around 1 - 2%. US futures are shaping up for a red day.
In Asia today, gasoline and heating oil joined crude in the march lower, but the New York Mercantile natural gas contract had a strong rally. Iron ore prices dipped below US$ 80 a tonne on the Dalian commodity exchange. Gold and silver were little changed.
At this juncture, it’s unclear if this market conniption marks a turn in the tide or a hiccup in the absence of US liquidity. There are a number of ECB and BoE speakers that will be hitting the wires later.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil recently moved lower toward an ascending trend line that currently intersects at 75.45. This could be a support level.
The recent low at 74.96 and the 100-day simple moving average (SMA), currently at 74.42, might also provide support.
On the topside, the recent highs of 79.33 and 81.81 are possible resistance levels.
Written by Daniel McCarthy, Strategist for DailyFX.com