By Russell Glaser – India put the breaks on the market today, sending equities and commodities lower. Spot crude oil was trading lower during the afternoon hours of the European trading session. Driving the price of the commodity lower was a surprise rate increase by the Reserve Bank of India. This sparked worries of tighter monetary policy across other central banks. Falling spot crude oil prices could continue through the week.
The rate hike came as a surprise to the market as most economists had expected the Reserve Bank of India to increase rates in April. The bank hiked the key lending rating rate 0.25%, surprising the market. Worries over the interest rate increase could begin to slow the global economic recovery, stymieing future crude oil demand. European equities were also trading lower after the interest rate increase
This sent spot crude oil prices lower during todays trading. The price of spot crude oil dropped below the psychological price level of $80 to $79.60, after opening the trading week at $80.85.
Spot crude oil prices could be under further pressure this week on a stronger dollar. The greenback is forecasted to post more gains against the euro after European leaders have been unable to find a fitting solution to the Greek debt crisis. The issue could be resolved on Thursday as European leaders are scheduled to meet to discuss a possible bailout package for the struggling European Union nation. Until an agreement is reached, the dollar could continue to rise against the euro, pressuring spot crude oil prices. A stronger dollar could send spot crude oil prices lower to the next support level of $78.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
