Previous Story
EU Bullet Report | Saudi and Russia ignite a rally
- After USD sell off most throughout yesterday, a reversal is taking place today. After news that Saudi Arabia and Russia have agreed to the terms of an output freeze, which drove oil prices to new monthly highs, a chain reaction of events unfolded which put USD in center stage again, gaining significant ground lost versus a basket of other currencies.
- OIL and GOLD: OIL surged as much as 4% to a year to date high of $42.23 per barrel after the Saudi/Russia agreement. The Interfax report cited an anonymous source, and said Saudi Arabia and Russia made the decision whether Iran is in or not. Iran had said it would not join a production-cut agreement, as it tries to boost output for export now that economic sanctions have been removed. A meeting between OPEC and non-OPEC producers will hold in Doha on Sunday, and an agreement could be reached then. GOLD dropped as stock markets surged also on the booming oil price yesterday. Remember that the yellow metal has an inverse correlation with stock market sentiment.
- Stocks: In equities, Wall Street rose with DJIA and S&P 500 indices gaining +0.94% and +0.97% respectively. Risk appetite remains strong in Asia with major indices rallying more than +2% in morning session. This comes a relief also for the Japanese government as its currency, the Yen surged as it always benefits from risk averse environments. Strength in the local currency hurts the competitiveness of Japanese exporters.
- Currencies: The yen hit a 17-month high earlier in the week, but it has been weakening, last down 0.3% against the USD. Elsewhere, EURUSD and GBPUSD retreated from fresh monthly lows and are looking for cues for further direction. Overall the USD has rebounded significantly following the oil rally however this strength has not changed longer term technicals which are against USD index.
On the data front today, US would release its PPI report for March while Bank of Canada would discuss monetary policy today. The latter is expected to hold the policy rate unchanged at 0.5%.
The post EU Bullet Report | Saudi and Russia ignite a rally appeared first on Forex.Info.
