Energy markets moved higher today with Brent climbing back over $70 per barrel to retest the last levels of previous support before the recent sell-off. Fresh hopes of oil demand growth came after the full approval of the Pfizer/BioNTech COVID-19 vaccine in the United States, making the Pfizer jab the first to get full FDA approval. Brent jumped 3.20% to sell for $70.98 per barrel at the time of writing. Natural gas had spiked by 7.25% with WTI oil moving up by 3.03% also.
Japan, New Zealand and Australia are all still under heavy disruptions from the current covid-19 spikes in positive cases and subsequent lockdowns. But the move into the higher yielding forex pairs has been maintained through the whole trading day.
The NZDUSD rose through the previous support zones to test the swing lows where it found some resistance. If today’s high holds, the move lower should be beyond the recent swing lows and the 0.6800 level. But that is somewhat dependent on the move in the US dollar.
Having clearly swept the swing highs from the end of March the US dollar is finding the higher prices more resistant so a visit to the old descending trendline could be up next. I would imagine that the US dollar traders would be keen to stay around these levels and they will look to the fixed income yields from the likes of the benchmark 10-year treasury note for some support.
The EURUSD also looks like it has fond some intraday resistance so a fall back down to test the 1.1700 could be enough to support the US dollar index for the rest of the week.
The US data out today was broadly positive, with the US new home sales beating expectations and that came on the back of a positive revision for the previous month. New home sales in the United States improved by 1% compared to the revised June rate, according to the report released by the US Census Bureau. July sales were at a seasonally adjusted annual rate of 708,000, topping analysts’ expectations.
As the economic calendar is currently light traders are also keeping an eye on the G7 resolutions on Afghanistan and the implications that Taliban leadership could have on the global economy. The UK’s Prime Minister Johnson believes that the G7 have huge economic, diplomatic, and political leverage, especially when it comes to the frozen Afghanistan $billions. The end of this month will become more tense as the US and coalition forces depart the region, with the rhetoric from the Taliban becoming more aggressive too.