The oil squeeze continued on today as it surged up the charts on the back of demand for the black gold, and as the USD weakened further providing plenty of opportunities for investors and traders alike. For many the real story continues to be around what is happening with production of oil and right now it seems very much the case that is not tapering off at a fast enough rate to bring equilibrium into the market, especially with Iran looking to restore its oil sector in an effort to bolster its economy.
On the chart oil has surged up to a major level of resistance at 38.04 and is looking very bullish at present, this comes on the back of a fall in the production of oil, but the real question is if it's enough to justify the higher prices at present. For myself there is a genuine possibility that we are seeing the first signs of a bullish movement up the charts and oil could indeed be on the move. I still feel the market is a little out of whack and traders should be careful with these movements as OPEC continues to pump more and more oil and Iran is looking ever more to increase capacity. The next level of resistance however can be found at 40.12 and this could be quite a strong level as oil struggles to find its bearings on the charts.
The New Zealand economy continued to find itself under pressure despite the recent rise in the NZDUSD, as milk price forecasts were yet again downgraded, while economic data came in weaker than expected. As ANZ job advertisements m/m came in -1.2% showing a slowing of the economy is certainly on the cards while manufacturing data out a few moments ago showed a further drop to -1.9%. All of these signs point to an economy starting to put the brakes on and the Reserve Bank of New Zealand will be playing close attention to this all and will be looking to stimulate the economy in the near future at this rate. It's looking ever more real that we may see a May rate cut in order to help the economy and with the recent fall in economic data I would not be surprised to even see some jaw boning of the NZD from the RBNZ.
On the charts the recent climb has surprised many as it climbed up to 0.6821 and has since seen a large amount of volatility around this resistance level. However, the next level of 0.6861 is looking very hard at this stage, as economic data continues to be weak. The RBNZ will also look to defeat a NZD so high at this stage, and will look to bring it back in line to bolster the primary sector and agriculture sector. Whatever the case the bulls are looking in control in the short term, but there days may be numbered given the predicament the NZ economy is in currently at present, and change could be a very real mindset in the coming months for NZD traders.
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