Oil leads charge on global markets

May 26, 2016

It is been a great day for oil bulls as they have leapt on the chart after the recent drawdown in US crude oil inventories which came in at -4.23M (exp -2.23M). This is a positive for the oil markets which have been looking for a strong drawdown now for some time, and with the recent Canadian troubles it was likely it would be carried onto into this week. For me the drawdown is a step towards equilibrium, but at the same time gasoline inventories have increased to 2043K which shows that refineries are trying to eat through the current oversupply.

Technically speaking oil is very much in a bullish movement as it climbs the charts to push the $50.00 a barrel mark. Can it sustain such a level. The first answer is yes if we continue to see strong drawdown's when it comes to crude. The reality is we may see some bearish pressure from a stronger USD as the rate hike prospects continue to increase in the short to medium term around July.

The New Zealand dollar continues to find itself under pressure much like many of the commodity currencies out there. But at present it is struggling even after the recent strong data from the NZ economy which showed exports increasing to 4.30B (4.10B exp). The trade balance continued to also be stronger coming in at 292M (43M exp), this was well above the previous reading of 117M and bucked the seasonal trend of a weaker trade balance this time of year. Despite the positive news I still feel that the RBNZ will look to act in the medium term to shore up the economy which continues to find itself under pressure, especially with the Chinese economy slowing down.

On the charts the NZDUSD has failed to close above resistance at 0.6706 and this is not surprising given that every wave down is a lower low. With the recent lows the market is looking for further support and it's likely to find it at 0.6676, for me this will be the key level that we will see if the bears have any further momentum at this present time. But also if the Reserve Bank of New Zealand could possibly look to manipulate this, or even support it in going further than the present.

Lastly, silver has been looking very much the technical player of the week at present . As it has drifted down the charts to touch a strong level of support at 16.140. Silver has always loved technical plays, but the recent level was quite strong and the strong USD has helped. Any push higher is likely to find resistance in the form of the 50 day moving average, but traders will be watching to see where the markets goes after the recent touch of the 16.140 level. 

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