Oil markets continue to do the un-impossible and fall further on the charts. With the brief oversupply in the market, and many asking if there is a bottom to the current troubles we have seen a strong push down the charts to 44.33 the current support level in the market. I for one have seen this coming for some time, and in my previous articles have touched on the fact that the bears are reacting to future prices on the charts. Certainly with Iran looking to pump more oil, and the fact that the US data has been a little more mixed than usual, it has all in turn led to many analysts expecting oil prices to continue to drop in the short to medium term.
One large impact for future oil prices has been the slowdown in China at present, with current manufacturing PMI data out from HSBC showing a contraction in the manufacturing sector as China struggles to boost growth in the long term.
Obviously with the large drop in oil prices the market is quick to take no prisoners and USDCAD continues to be quite the victim at present, as the oil prices weigh heavily on the market. The next level of resistance can be found at 1.3386 on the charts, and many are expecting further higher highs in the short term as the Canadian government is about to go through a period of elections and economic uncertainty weighs on the economy in the wake of falling oil prices.
I don't normally look at the GBPUSD but it's well worth a look after today's data which showed Manufacturing PMI lifting to 51.9 (exp 51.5) on the charts. For the most part the UK economy has been trucking along quite nicely in the mid to long term, but all that is changing at present on the charts as we have a strong pattern forming in the shape of a triangle that markets will be looking to utilise.
Now certainly with the upcoming UK data on construction PMI data and House prices we can expect to see some strong movements on the charts. I anticipate that if we do get some positive moves we may see a strong rally for some time. Either way with positive data and a semi hawkish central bank the BoE is likely to be the ideal candidate to sort the mess of an economy that the UK is in.
The Australian dollar has been an enigma lately as prices have not reflected demand in assume for the short term. However, it's a strong day for the AUD as we have a raft of data all in the space of a few very short hours. Firstly we can expect retail sales and trade balance data due out, then following up this we can see expect the RBA to not change rates at all in the present environment, though it may talk up slashing the dollar
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