By Margaret Yang
Commodities - Crude oil is facing headwind as Saudi Arabia hesitated to commit to freeze production unless Iran agrees to join the output freeze camp. This has brought down the market’s expectation of what will be achieved in the long-awaited production freeze talk on 17th Apr. On the other hand, we are seeing profit taking in the market as the daily crude oil total long positions on the Tokyo Commodity Exchange has fallen sharply by 13% to 56,263 on 4th Apr from 64,251 on 31st Mar. Crude oil prices have come down 13% since 22nd Mar.
Equities - A quiet day for Asian equities yesterday, with major markets like Hong Kong, China and Taiwan closed for the Ching Ming Festival. The Nikkei Index closed down 0.25% to 16,123 points, extending its losses after falling 3.5% on Friday due to a stronger yen. Singapore’s Straits Times Index finished 16.86 points or 0.60% higher, mainly lifted by SingTel, Genting and REITs. European markets opened lower but ended higher on confidence in the US recovery. The French telecom companies Bouygues SA and Orange SA failed to reach a merger deal. Both shares fell sharply after market open. The US market on the other hand closed 0.3% lower. The Nikkei opened weaker on stronger yen early this morning. It has broken below a key support level at 16,245 and the next major support level could be 14,800.
FX – EUR/USD is challenging a key resistance zone of 1.1400-1.1500. The RSI- a momentum indicator is at 68.78%, close to the overbought level. USD/JPY dipped further to 110.90, hitting the key support level of 111.00. Breaking down below this level it may move towards the next support at 110.0. AUD/USD retraced a bit to 0.76 as traders await the cash rate announcement from the Reserve bank of Australia. Commodity price weakness has also put some pressure on AUD. The immediate support and resistance level for AUD/USD is 0.7436 and 0.7812 respectively. USD/SGD has found some support at the 1.3500 area, which serves as the immediate support level. If it breaks below this level, it may go down further to 1.3300 and 1.3150. The Singapore dollar has strengthened 4.73% year to date.
Key Technical levels to watch:
- Immediate resistance levels: 1.1400-1.1500
- Immediate support levels: 1.123-1.1100
- RSI at 68% - very close to the overbought zone (70%-100%)
Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.