Aggressive Fed bets ease and OPEC in focus
Oil => The commodity rises above 85.00
BTC/USD => The cryptocurrency rises above 20k
NZD/USD => The pair rises towards 0.5750
Oil look to OPEC+
Oil prices have rallied over 8% this week ahead of the OPEC+ meeting today, the first in-person meeting since March 2020. The oil cartel is widely expected to cut oil production by up to 1 million barrels per day, marking the largest output cut since the pandemic. Prices have fallen from around $120 to $80, prompting the move even though inventories remain tight. However, it is worth keeping in mind that some OPEC+ members are already producing less than their production quota, which will mean that the impact of any cut is dulled slightly. Furthermore, large cuts could draw plenty of criticism.
Where next for the oil price?
Oil prices have been trading in a falling channel since mid-June. The price has recently rebounded off the 76.76 low and recaptured the 50 sma; the RSI is heading into bullish territory. The price is attempting to break out to the upper band of the falling channel, which could spark further gains towards$90.40 the September high and 97.00, the late August high. Failure to break out on the upside could see the oil price test the 20 sma support at 83.20 ahead of 76.76, the September low.
BTC/USD rises on less hawkish Fed hopes
BTC/USD rose above 20k again, gaining 3% over the past 24 hours, in risk-on trade as the market becomes more optimistic that the Federal Reserve could soon slow the recent steep rate hikes, which have become the new norm. As with the equity market, the crypto market responded favourably to weaker than expected data, suggesting that the economy is slowing. BTC/USD has risen over 20k on several occasions in recent months but has failed to push much beyond.
In crypto news, Japan’s Prime Minister Fumio Kishida said that Japan would expand its digital presence, including NFTs and met-verse services.
RBNZ hikes rates by 50 basis points
NZDUSD is holding steady after a brief spike higher following the RBNZ rate decision. The central bank raised interest rates by 50 basis points to 3.5%, the highest level in seven years, and said it wouldn’t stop there. Governor Adrian Orr said core inflation is too high, and labour resources are scarce. The US dollar is rising after several days of weakness. The USD fell yesterday after weaker than forecast JOLTS job openings and factory orders, which fuels bets that the Federal Reserve could act less aggressively raising interest rates. Today attention will be on US ISM service sector data which is expected to show that activity remained solid. Any weakness could support the less hawkish Fed narrative and bring the USD lower.
Support can be found at 0.5610 (October low) and 0.5570 (September low).
Resistance for the pair can be seen at 0.58 (weekly high) and 0.5860 (20 sma).