The Vienna Agreement – To Be? Or Not to Be?

Fundamentals

The Bank of Canada pulled no surprises yesterday. It left its rate unchanged at 0.5% p.a.
A number of executives of monetary authorities spoke yesterday. Haruhiko Kuroda, governor of the Bank of Japan, spoke at 12:00 midnight GMT, hinting that the BoJ’s interest rate is a little below the equilibrium. This strengthened the yen slightly against the US dollar.
At 12:45 pm GMT, European Central Bank President Mario Draghi spoke, noting that Europe’s macroeconomic environment is improving. One might therefore conclude from all the rhetoric that there is no reason for interest rates to rise further. All this hurt the single European currency. The market saw increased volatility with about 15 points movement.
Today at 8:30 am GMT the UK is expected to release its GDP figures. And at 12:30 pm GMT the number of US jobless claims will be announced. Naturally, however, traders will be glued to the OPEC meeting and the decision whether to extend last year’s Vienna agreement on cutting oil production. Analysts agree that the agreement will likely be extended. You’ll recall that an agreement cutting oil production to 32.5 million barrels per day was reached in November at OPEC headquarters in Austria.

Stocks

Corporate reports from Russia’s Alrosa, Megafon, and UES, the federal grid company, will be of interest.
Note that the Russian market continues its slow, but steady slide. Oil companies – Transneft and Surgutneftegaz – are the pace setters in the decline. Technically, the MICEX Index is in a corrective down wave according to Elliott’s wave analysis. We now see several possible scenarios, including the formation of a zigzag with a 5-3-5 internal structure. If this is the case, the indicator is in the last, fifth wave of decline. This might bring the asset below this year’s low, i.e., 1900 points. Another possible scenario is that the index is in a flat correction. In fact, this scenario is entirely consistent with the first one. That is, we again see the index in the 5th corrective C wave of a flat correction.
The Dow Jones Industrial Average is again slowly approaching its historic high – and the resistance at 21000 points. Note the rather high trading volumes, which indicate that investors’ interest has been piqued again and which might be a warning of a possible quick reversal. Time will tell.

Currency Market

The EUR/NZD pair fell yesterday, but it is obviously premature to talk about the reversal of a short-term trend. We are now seeing the pair testing the lower boundary of an ascending price channel. So for now the bulls have an opportunity to re-open positions (short stops). It makes sense to reverse positions only if a breakthrough of the support line is confirmed by basic technical indicators, e.g., the parabolic system and directional movement index, and, for example, if a Williams fractal 1-2-3 pattern forms. The oscillators have reversed, but at present this telling us nothing; the signals can be seen as weak.
As we noted, the CAD/JPY pair reached the target of 83 yen and kept rising an attempt to consolidate higher. We have now gotten a buy signal from the MACD, but everything will depend on whether the bulls can go past 83.70 yen, where there is a 100% Fibo correction

Nikolay Dudchenko, Olymp Trade analyst

Olymp Trade Review