Market Analysis

Oil price jumped rapidly

FOREX

Yesterday the index that measures the performance of the dollar against other major currencies climbed 2.2%. The greenback’s gains happened alongside publication of the worst ever US unemployment data, with more than 6.6 million registering for unemployment in a single week. This somehow counterintuitive behaviour of the American currency, going up when the country’s economic conditions are deteriorating, celebrates the status of the dollar as a safe haven, sought after by investors during times of economic decline, even when that decline is occurring in the United States. Later today, data related to the creation of new jobs, the non-farm payrolls, will be published; this is normally one of the most important points in the economic calendar, but not this time. The data refers to the period ending on the 12th March, largely preceding the acute phase of the crisis and therefore almost irrelevant. It is therefore quite likely that the non-farm payrolls will have little or no impact on the behaviour of the dollar on this occasion.

Ricardo Evangelista – Senior Analyst, ActivTrades


OIL 

Once again, a tweet of Donald Trump was enough to generate a huge speculative move on the markets, with oil the asset in question this time. Speculation about the possibility of a deal between Russia and Saudi Arabia, also involving the US, saw the oil price jumped rapidly from $21.50 to $27, before slowing down to $25. Investors are expecting something to happen, even if frankly speaking the deal doesn’t seem immediately possible and at this stage seems more like speculation than something likely to happen quickly. And this is the key point as the oil market needs something to happen as soon as possible to rebalance the shock that is happening on markets with two black swan events at the same time: coronavirus and a missing OPEC deal.

In other words, unless something real (and not only rumours) is agreed, the risk is that the barrel will slow down again in the next few days after this quick and impressive rally.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European shares had a mixed opening for the last trading session of the week following small losses in Asia overnight. Most European share markets are trading around their neutral zone as investors hesitate to extend yesterday’s gains ahead of today’s highly expected US job report. In these uncertain times, investors will hold on and switch their focus to data due out today such as US non-farm payrolls to get more clues on the damage the Covid-19 has done to the economy so far. However, it is still hard to assess what is already priced in the markets. Sharp price action and a surge in volatility are to be expected in the afternoon as many investors will be tempted to adjust their exposure following the release of US data and prior to a busy weekend. Insurers and energy shares weigh on European markets today with the Stoxx-50 Index still drifting within the 2650pts-2,700pts range. The market remains well capped by the resistance level at 2,720pts, which is placed inside its bearish gap zone, while the price is also supported by an important technical level above 2,634pts. A break-out of one of these zones would open the doors to a much clearer directional movement.

Pierre Veyret– Technical analyst, ActivTrades

 

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