China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Market outlook: April 15-19, 2019
2019-11-11 • Updated
A new trading week brings new opportunities. Have you read “The Black Swan: The Impact of the Highly Improbable”? The main idea of the book is simple: we should be ready for unpredictable events. As soon as you are ready to meet with something that no one expected, you will win. Let’s consider all possible variations for market moves in the upcoming days.
This week started with a bright sky for the stock market. Optimistic Chinese data that were released on Friday eased worries about the slowdown in the global economy. Treasury Secretary Steven Mnuchin provided hints on the close trade deal between the US and China. It became another important factor that improved the market sentiment.
Traders’ eyes are on the renewed earnings season that will show the strength of the American companies. Check the earnings calendar and trade stocks with FBS.
Let’s focus on the Forex.
On Monday, the US dollar index had been moving down after the attack of Mr. Trump on the Fed. American president claimed that it was a fault of the Fed that the stock market hasn’t been up 5,000 to 10,000 additional points as it was supposed to be. As a result, the USD has depreciated against most of the currencies.
Events to watch:
- Wednesday (April 17). Retail Sales readings.
- The news as there are no other factors that may help to forecast what will happen to the US dollar.
The direction of the USD will determine the moves of major currency pairs.
Last week didn’t determine either strength or weakness to the Canadian dollar. The CAD index didn’t surprise with significant moves. The beginning of the week isn’t shiny for the loonie, too. Although the USD was a loser against most of the currencies, the Canadian dollar wasn’t among them.
Events to watch:
- Wednesday, April 17. CPI and Trade Balance.
- Thursday, April 18. Core Retail Sales.
- The situation in the oil market.
Levels to watch: on Monday, during Asian and European sessions, the trading was limited with the lack of both bulls and bears strength. The further direction of the pair will depend on Monday closure price. If bulls manage to hold USD/CAD above 1.3334, odds of the further rise will prevent on the market. The first strong resistance lies at 1.3384 – the upper boundary of the consolidation zone. As soon as 1.3384 is broken, the USD traders will be able to push the pair towards 1.3346. However, technical indicators signal risks of the decline. MACD and Awesome Oscillator are near to cross the 0 level upside down. Bears need to pull the pair below 1.3305 (50-day MA and the bottom line of the previous consolidation). Next supports are at 1.3272 and 1.3221.
Although the USD isn’t strong and the market sentiment improved, the Australian dollar couldn’t use the situation in its favor.
Events to watch:
- Wednesday, April 17. Chinese GDP. There is a strong correlation between the situation in the Chinese economy and the direction of the Australian dollar.
- Thursday, April 18. Employment change and unemployment rate.
Levels to watch: Monday trading was weak. To prove their strength, bulls need to push the pair above 200-day MA at 0.7197. The next resistance will lie at 0.7212. After the breakthrough, AUD/USD will get a chance to climb to 0.7255 and higher. Technical indicators don’t signal the fall of the pair. However, the rise may be limited if the US dollar recovers. In this case, AUD/USD will return to the consolidation range between 0.7107 and 0.7170. A break below 0.7107 will provoke a decline to 0.7044 (pay attention to the trendline).
Traders are quite tired of the GBP trading. Did you hear the news that software robots crashed because of the many Brexit headlines? Not surprising. However, up to now, it seems like the situation has softened after UK and EU managed to agree on the prolonged Brexit last week.
Events to watch:
- Tuesday, April 16. Average Earnings Index.
- Wednesday, April 17. CPI.
- Thursday, April 18. Retail Sales.
Levels to watch: During Monday, the GBP/USD pair had been rising based on the weak USD. However, last week, the price formed several candlesticks with long upper shadows that was a sign of low bullish strength. Bulls need to push the pair above 1.3125 to cut risks of the downtrend. A breakthrough above 1.3186 will confirm a forming upward movement. However, the pressure is high and the pair may turn around towards 1.3072. Consider the trendline as it will add additional pressure on the pair. Moreover, MACD and Awesome Oscillator formed a bearish divergence. It’s not strong but signs of it exist. Next supports are at 1.3012 and 1.2959. 200- and 100-day MAs are located near 1.2959, as a result, the pair may rebound.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.