WTI crude sputters following the surprise buildup in US oil inventories last week. The latest EIA data showed that the US stockpiles
increased by 7.9 million barrels last week, versus a 2.5-mio barrel decrease penciled in by analysts, denting the appetite on lower-supply
/ better-demand dynamic. Top sellers are waiting in ambush near $35 per barrel. We could possibly see another retreat toward the $32/30
support zone.
In the FX, the US dollar plunged as safe haven capital flew toward the yen, Swiss franc and gold.
The
EURUSD advanced past the 1.11 on the back of a broadly softer US dollar and hope that the much-needed 750-billion-euro fiscal rescue package
could give a boost the Eurozone economy. The latest proposal from the European Commission needs an approval first, but the so-called frugal
four will likely come round to the rescue fund though there are uncertainties on how the historical rescue package would be implemented.
Technically, the euro recovery could gain pace if the major 61.8% Fibonacci resistance at 1.1160 is cleared and target the 100-week moving
average near the 1.1225 mark.
Cable tests the 50-day moving average resistance to the upside. A further plunge in US dollar could give a
short term energy shot to the pound, yet the medium term outlook remains negative for sterling as the no-deal Brexit anxieties will likely
curb the appetite before the 1.25/1.2515 area (psychological support / 100-day moving average). Price advances in sterling could be
interesting top-selling opportunities as deadlock looms before the next round of Brexit negotiations next week. The UK will start
preparing for a no-deal divorce if we do not see a material progress in talks next week. The latter would boost the no-deal Brexit pricing and
lead to headwinds in sterling.
Finally, support is building near the 1.3730 in USDCAD, as the fading rally in oil began weighing on the
Loonie. Due today, the GDP data should confirm a 9% decline in March. Along with the stagnating oil recovery, the latest growth figures could
give cold feet to CAD-bulls, ignite some profit taking and push the USDCAD back above its 100-day moving average (1.38).
By Ipek Ozkardeskaya
