Oil Market Buoyed by Strong Caixin Services PMI Performance

Oil demand rises as Caixin Services PMI accelerates—key events, including the ADP report and Powell’s speech, impact currencies.

The latest data from the Caixin Services PMI revealed a notable uptick in services activity in March, signaling a robust economic quarter for China. The PMI reading of 52.7 surpassed market expectations, indicating accelerated growth as new business surged at the fastest rate this year. Additionally, business confidence improved, reflecting optimism among service providers.

Expectations anticipate that this acceleration in economic activity in the world’s third-largest economy will sustain higher demand for crude oil. WTI oil prices were trading around $85.50 per barrel during the Asia session, supported by positive economic indicators from China.

Looking ahead to the Europe and US sessions, market participants are eyeing key events that could impact trading dynamics:

ADP Employment Report: Market analysts anticipate a slight increase in job growth for March, with a projected figure of 148K, compared to the previous month’s reading of 140K. Any deviation from these estimates could influence the performance of the US dollar.

ISM Services PMI: Following a solid rebound in the manufacturing sector, analysts expect services activity to expand for the 15th consecutive month. Investors will also closely monitor the price component for signs of inflationary pressures.

Fed Chair Powell Speaks: Federal Reserve Chairman Jerome Powell’s remarks at Stanford’s Business, Government, and Society Forum could inject volatility into the markets, particularly towards the end of the US session.

Oil Market Buoyed by Strong Caixin Services PMI Performance

In the currency markets

Dollar Index (DXY): The dollar’s performance will likely be influenced by the ADP employment report and Powell’s speech, with a weak bearish bias anticipated.

Gold (XAU): During US trading hours, gold prices may experience volatility, influenced by the ADP report, ISM Services PMI, and Powell’s speech. Observers note a weak bullish bias.

Australian Dollar (AUD): Despite the absence of significant news events today, the AUD is encountering critical support and resistance levels at 0.6480 and 0.6530, respectively. Analysts anticipate a weak bullish bias.

Kiwi Dollar (NZD): The NZD may experience fluctuations, with key support and resistance levels at 0.5940 and 0.5990, respectively. We observe a weak bearish bias.

Japanese Yen (JPY): We anticipate USD/JPY hovering around the 151.50 zone, with the 152 level posing a magnificent barrier—observance of a weak bullish bias.

Euro (EUR): Market analysts anticipate that the Eurozone’s flash CPI reading will influence the EUR’s performance, with expectations leaning towards a weak bullish bias.

Swiss Franc (CHF): The USD/CHF pair might stay elevated, with the 0.9150 level as a significant resistance barrier. We observe a weak bullish bias.

Pound (GBP): Positive economic indicators may continue to support GBP’s recent uptrend, with analysts anticipating a weak bullish bias.

Canadian Dollar (CAD): Rising crude oil prices may strengthen CAD, potentially leading to a break below recent support levels for USD/CAD. Observers note a weak bullish bias.

In the oil market

EIA Crude Oil Inventories: Expectations of a higher-than-expected drawdown in inventories could further support oil prices, which touched $85.80 per barrel during the US session. Consequently, there is a weak bearish bias observance for the next 24 hours.

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