Oil jumps on surprise output cut, US Dollar benefits from cautious mood

Markets have started the week on a cautious note and the US Dollar has kept its footing after having gathered strength against its major rivals on the last day of March. S&P Global will publish revisions to Manufacturing and Services PMI surveys for March and the ISM Manufacturing PMI will be featured in the US economic docket. The Bank of Canada (BOC) will also release its quarterly Business Outlook Survey.

Saudi Arabia, Russia, the United Arab Emirates and other OPEC+ producers have announced that they have agreed to cut oil output by a total of around 1.16 million barrels per day from May until the end of 2023. Crude oil prices opened with a significant bullish gap and the barrel of West Texas Intermediate reached its highest level since late January at $81.50 before retreating below $80 in the European morning. Rising energy prices seem to be weighing on market sentiment with US stock index futures trading deep in negative territory in the early European session. During the Asian trading hours, the data from China showed that Caixing Manufacturing PMI declined to 50 in March from 51.6 in February, compared to the market expectation of 51.7.

In the meantime, the US Dollar Index clings to modest daily gains at around 103.00 while the 10-year US Treasury bond yield rises more than 1% on the day above 3.5%.

AUD/USD stays under modest bearish pressure and trades at around 0.6670 in the European morning. In February, Building Permits in Australia grew by 4% but Home Loans declined by 1.2%. TD Securities Inflation declined to 5.7% on a yearly basis in March from 6.3% in February. In the early Asian session on Tuesday, the Reserve Bank of Australia (RBA) will announce its interest rate decision.

Despite the downward correction witnessed ahead of the weekend, EUR/USD managed to close the week in positive territory for the fifth straight time. The pair continues to stretch lower toward 1.0800 on Monday.

After having touched its highest level in nearly three months above 1.2400 on Thursday, GBP/USD fell sharply on Friday. The risk-averse market atmosphere caused the pair to edge lower during the Asian session and it was last seen trading a few pips below 1.2300.

Gold price extended its downward correction toward $1,950 early Monday. With the US T-bond yields pushing higher in the European morning, XAU/USD stays deep in negative territory despite having recovered toward $1,955.

USD/JPY opened with a bullish gap and climbed to the 133.50 area on Monday. The Japanese yen is struggling to take advantage of safe-haven flows amid rising US T-bond yields.

Following a quiet weekend, Bitcoin edged lower and was last seen trading slightly below $28,000 with a daily loss of around 1.5%. Ethereum fell more than 1% on Sunday and seems to have gone into a consolidation phase below $1,800 early Monday.

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