Asia Market: Another Day, Another Record High

Chart, Trading, Courses, Forex, Analysis

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Oil Markets

With bigger fish to fry and a likelihood to defer to the DOE report tomorrow, oil traders and prices remain entirely unmoved by the small offsetting draw in crude to a larger than expected build in gasoline. 

Oil prices remain buoyed by a weaker US dollar and a confluence of a sturdy US economic recovery, plus solid Chinese import data that points to a domestic revival. And the sentiment was further bolstered when OPEC suggested a brightening outlook and stimulus packages will boost economic activity and oil demand this year. And, by all accounts, everyone to a tee expects to see a powerful Spring and Summer for US gasoline demand.

Crude prices continued to drift higher most of the EU and NY sessions, reacting to the buoyant macro outlook. However, momentum is still capped by new vaccine health concerns as the Adenoviral vector vaccine may have a problem and the continuing lockdown effects as traders await clear evidence of rising global demand.

On the supply side, the EIA's DPR signalled US shale production bottoming in April/May, consistent with the higher rig count and the pick-up in well completions that we’re seeing could be the ultimate supply hurdle for oil prices heading into peak US Summer driving season. Not only will shale be keen to add more barrels to this demand, but so will Saudi Arabia – especially with The Moscow Times reporting that Russian oil production may never recover to the 2019 level.

Currency Markets

The US dollar fell to three-week lows on Tuesday after a well-telegraphed beat in the US inflation data failed to move the Fed’s policy normalization dial. 

FX traders are deferring the Fed's call for liftoff later rather than sooner. The imminent J&J vaccine suspension might have helped that view by possibly pushing back herd immunity in the US; at a minimum, it certainly didn't enhance the US dollar appeal. 

EURUSD traded higher after the US March CPI, despite the robust data. The pair traded down to 1.1880 on before reversing higher and then sliced like a hot knife through butter through the 1.1920/25 level that had capped it in the past few days. With 1.1950 currently being tested on a clean break, 1.2000 is the technical resistance levels to watch. It’s gripping price action, indicating that the short-term pain trade in the EURUSD remains to the topside.

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