Euro fell, Gold testing an important support, Oil crossed back above $47, Kiwi dropped after the RBNZ

Euro fell, Gold testing an important support, Oil crossed back above $47, Kiwi dropped after the RBNZ

Posted on Thursday, May 11 2017 at 2:39 pm GMT+0000

Euro fell after Draghi’s comments

The euro fell to a two-week low after Draghi’s press conference, despite positive comments on the European economy and the ease of negative political pressures; he noted that inflationary pressures were still weak, so it is too early to talk about a rate hike and tightening monetary policy.

The broadly strong dollar’s on the other hand resulting from the increasing probability of interest rate hike taking place next month is another placing further pressure on the Euro. Currently, the Euro is testing an important support area, so a bullish bounce might be on the play before the next negative leg that might cover the price gap at 10780 and I expect the EUR to continue trading within 1.09-1.06range until the negotiations with the Kingdom started.


Gold is testing an important support area

Gold has remained under pressure for the recent weeks and marked a bearish trend in the short term due to the US dollar strength and possible interest rate hikes, which improved investors’ risk appetite and prompt them to abandon safe havens and replace them with stock market investments.

However, that decline had been ceased following the test of a very important support area and it is evident that the bearish momentum is weakening, and therefore a possible reversal could be on the making. A further break above the 1225 barrier would confirm a an extended rally targeting 1240-1253 in the coming days.

It should be noted that safe havens such as gold might be redirected higher due to the political turmoil between Korea and the United States and other economic matters such as European-British negotiations. When it comes I always prefer buying gold.


Oil crossed the $ 47 barrier for the first time in 10 days

Oil prices managed to rise breaking above the $ 47 barrier for the first time in the last 10 days as crude inventories in the United States fell more than was expected, what signaled for a probable demand recovery during the current week.

However, this does not mean a negation of the negative pressure in the long run. US production continues to rise, and last week, 206 barrels was added recording 11th consecutive weekly increase, bringing US production to its highest level since August 2015.

Focus turns now towards OPEC meeting, If the Organization couldn’t extend the production cut agreement for another six months, I expect prices to fall back towards the  $40- $42 zone. Extension of the agreement will stabilize prices at the current levels ranging between $53 and $45. .


Kiwi dropped after the RBNZ

The Asian session opened today with the RBNZ policy meeting during which the bank kept interest rates unchanged. Although this was broadly expected, the kiwi lost 100 points at a fast pace but the markets were hoping for a more hawkish stance with respect to inflation. The central bank sees inflation slowing and supported its view not to raise rates soon, as this would undermine growth.

Kiwi fell to a one year-low, helped by the rise in the New Zealand stock index, which led the gains in the Asian markets. These markets were affected by the US equity markets, which are still at record highs and the increase in oil prices that supported the energy companies as well as the yen decline.