Trading news

Oil higher with mild dollar weakness to support market sentiment

Market Overview

As the new trading week begins, market sentiment has started relatively settled but in a more positive mind-frame today with oil trading higher. The rally on the dollar has just stalled a touch in the early moves, with Treasury yields flat to slightly lower on the 2 year and 10 year maturities. However it seems to be a more positive start to trading for the oil price which is helping sentiment, after suggestions that there is a movement towards implementing the OPEC production cuts. Furthermore, Russian President Putin also suggested that there are few hurdles to reaching an agreement on production levels. This has helped to pull the price back higher again. The positive sentiment is seen across forex majors with the yen remaining weak, whilst the Canadian loonie is outperforming the US dollar, another signal of a positive impact of oil.
Equity markets are supported today despite a mildly negative close to Wall Street on Friday. The Nikkei has closed 0.7% higher (further yen weakness helps this), whilst European markets are mixed to slightly higher. In forex, the dollar is slightly weaker, with the euro the best performing major. The dollar weakness is helping to support gold and silver, whilst oil is also a beneficiary of this, up over 1%.
There is very little on the economic calendar today, so attention will be on ECB President Mario Draghi who testifies before the European Parliament at 1600GMT.

Chart of the Day – NZD/USD

The Kiwi has outperformed the Aussie in the past week (the Aussie has been panned), but this could go one of two ways. Is this just storing up downside potential for a breakdown on the Kiwi this week? The Aussie has broken through a series of key supports against the dollar, whilst, for the Kiwi, support at $0.6960 from the June/July lows as yet remains intact. However, the momentum indicators have just taken a turn for the worse, whilst the RSI still has further downside potential. There is also a band of overhead supply from the key lows between $0.0.7030/$0.7100 that is likely to prevent any technical rally getting too far this week. The break below the key support of the 144 day moving average and also the old key uptrend resistance both come in around $0.7120 which is just above the resistance at $0.7110 from Wednesday/Thursday last week. Hourly momentum configuration suggests that rallies are still being used as a chance to sell. Below $0.6960 opens $0.6880 and $0.6820.

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Monday, 21 Nov, 2016 / 9:00

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