After the bullish start of the year, the rand has started to weaken since the last Thursday. Let’s point out the main factors affecting the ZAR and set the key levels for this week’s trading.
Daily oil market overview
The oil prices are higher at the time of writing. They managed to regain their strength that was undermined after OPEC meeting on May 25. The market participants expected deeper and longer cuts from OPEC market, but were disappointed with the meeting’s outcome. Since then they have been selling into every bounce. On Monday, oil prices were hit by announcement that Saudi Arabia, Egypt, UAE and Bahrain cut their links with Qatar seeking to punish the country for according assistance to Islamist groups. Traders feared that a political rift between these Arab countries would undermine OPEC’s effort to curb global oil glut.
Tuesday was a happy day crude oil futures. As market realized geopolitical tension is unlikely to become more severe in the Middle East, with Qatar clearly wanting to diffuse the politically charged environment rather than to escalate it. Qatar’s policymakers have recently pledged to adhere to their commitment under the output cut agreement. Even if it did refuse to comply with OPEC agreement, the implications for the oil market would be minimal, given the fact that Qatar’s commitment to cut amounts to just 30,000 barrels a day.
Today analysts expect US official data from the Energy Information Administration to print a ninth-straight decline in domestic crude inventories. This should offer some support to currently falling oil prices.
At the present moment, Brent oil futures are hovering near $49.80. If the EIA data does reveal a drop in the US crude oil inventories, the futures will rise higher towards the psychologically resistance at $50 or higher.
If we look at the daily charts of the US dollar index and the USD/JPY pair, we will see a misleading trend.
Britain has to leave the European Union in 66 days. Will it leave with a trade deal (good for the GBP) or without one (bad for the GBP)?
The last "Pennant" pattern has been broken, so bulls found resistance at 1.2915. Nevertheless, the market is likely going to move on, so we should...
USD/CHF remains weak across the board and stays strong with a bearish consolidation below the 200 SMA at H1 chart…
There's no any reversal pattern so far, so the market is likely going to test the nearest resistance area in the short term...