Oil markets have been very bearish today as Saudi Arabia continues to put pressure on the markets as it recently stated that it will continue to pump oil at the maximum possible production rate in order to keep pressure on the market. The Saudi oil minister Al-Naimi has spoken out on the fact that he believes solar is the future and that oil will continue to have a role in the current market place, but it's time to shine is most certainly over. These comments have pushed WTI down 3% in today's trading so far, and it's looking ever increasingly bearish to say the least.
The market is most looking to find some sort of bottom and hit equilibrium and that will most certainly happen when there is a crunch in the oil industry as this industry is currently haemorrhaging cash at a colossal rate. In the short term though the focus is certainly on the next major support level which is at 24.96 and this could certainly be a line in the sand moment for a lot of businesses. I would anticipate some sort of bounce at 24.96, but even then it looks all the more certain that we could see even further pressure on oil markets and $20.00 barrels of oil are not a stretch of the imagination in this day and age. For any traders looking to climb out of the rut and find some bullish movement resistance is likely to be found at the 20 day moving average which has so far shepherded oil down the charts.
Dollar strength has pummelled the pound today as US New home sales came in positive at 5.5M (5.3M exp). The market was also upbeat about consumer confidence which despite being disappointing still showed a strong result at 92.2 (97.2 exp), while it is a bit of a drop it's still far more upbeat than a year ago and the US consumer continues to be a winner in the markets. At the same time the UK is being wracked by fears that there could be a Brexit from the EU which would play havoc on financial markets and especially people holding the pound, economic data has also been disappointing for the most part and the market is looking very bearish for the GBPUSD and this looks set to continue in the near future.
On the charts the recent breakdown of support at 1.4082 is a very bearish signal and traders at present are taking full advantage of the breakdown in this key level. The next levels down are likely to be key targets for traders with support at 1.3916 and 1.3662 likely candidates for levels to test. Many are now expecting that these further drops could be on the horizon and prelim GDP data will be a strong candidate to cause further chaos in the markets. Traders will certainly be eyeing up this as a key metric for the future of the UK economy as it has been hit and miss as of late, and it will be interesting to see the result.
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