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Crude Oil Surge On US Sanctions Report Dominates Asian Stock Trade

Crude Oil Surge On US Sanctions Report Dominates Asian Stock Trade

David Cottle, Analyst


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Asian Stocks Talking Points:

  • Stocks were broadly lower Monday
  • A spike in oil prices stoked broader risk aversion
  • The US Dollar made gains, but commodity currencies did too

Find out what retail foreign exchange investors make of your favorite currency’s chances right now at the DailyFX Sentiment Page

Asian stocks put in a weak Monday showing in a holiday-thinned session which was really all about oil.

Crude oil prices rose on a Washington Post report saying that US Secretary of State Mike Pompeo is set to end sanctions waivers on entities which import crude or crude products from Iran. Some eight countries currently enjoy such license from Washington but it looks as though they will have to cease shipments.

This announcement could affect US trade relations with China and India, both key Iranian trade partners, along with more obvious allies like South Korea and Japan. In any event crude oil prices rose to new two-month highs across the board.

Stock markets in Australia and Hong Kong were out of action for the Easter holiday break; most functioning mainboards suffered from an oil-related bout of risk aversion with the Shanghai Composite down 1.4%, the Kospi off 0.3% and the Nikkei 225 doing much better but still a few ticks into the red.

The US Dollar held broadly firmer in thin trading, but commodity linked units like the Canadian Dollar got some support from oil. There was also some residual support apparent from last Friday’s better than expected US retail sales figures.

USD/CAD remains under gradual but clear pressure on its daily chart

US Dollar Vs Canadian Dollar, Daily Chart

Trade has been essentially rangebound through April but there now seems a clear risk of a bearish lower low on the chart, below those mid-March highs. For as long as they remain unchallenged focus will be rather on the lows of late February in the high $1.31 region. Gold prices inched upward but remained near four-month lows.

Given plentiful market closures still ahead for Easter Monday the economic data calendar is unsurprisingly light. US existing home sales are coming up along with the Chicago Federal Reserve’s national activity index. They will likely struggle for attention.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.