By Jameel Ahmad (Chief Market Analyst at FXTM)
The month of March saw WTI Crude make its biggest gains since the beginning of the year, pushing through the $40 level from $36, raising the prospect of a bull run. The prospects were somewhat dimmed by a constant weakness in the form of a fundamental oversupply, but that didn’t stop a series of small charges by the bulls.
The uptick in commodity prices shone a light on another emerging economy; Malaysia. The USDMYR ranged between 4.1403 and 3.9610, shaking off China woes and instead taking momentum from the rising crude oil price.
The Malaysian currency received a huge boost in investor sentiment following the price of WTI oil finally jumping past $35, with this very much providing a green light to the bulls. This move in WTI was critical towards encouraging and improving sentiment in the emerging markets, and it allowed the Malaysian Ringgit to progress towards the next phase of its psychological recovery of what have been huge losses since the beginning of 2015. We now see the currency probably ranging between 3.98 and 4.14 in the months ahead while a consistent and sustained move in WTI either side of $35 and $42 would be needed to reassess this possible trading range.
The Gold price peaked at just over $1270 in the middle of the month on the back of safe-haven buying, and then dipped towards $1230 per ounce towards the end of March as the trend ran out of momentum amid an upswing in global stocks.
Major currency pair EURUSD did an about-face compared to February’s performance, rising from 1.0954 to 1.1335 towards the end of the month. The Euro benefited from sourer investor sentiment towards the USD, and more easing by the European Central Bank. The GBPUSD had a rough ride in March, peaking to a high of 1.4507 and then dipping to a trough of 1.4065 on headwinds caused by fears over a Brexit.
The EURUSD jumped strongly during the month of March, benefiting from a softer USD, but mainly exploding in momentum due to ECB President Mario Draghi taking onlookers by surprise when he unexpectedly announced that he didn’t believe there was further movement to reduce interest rates.
While I think it is important to point out that the ECB has very famously stated on an ongoing basis that they would not introduce QE, and this turned out not to be the case, the comments that no further interest rate cuts were likely, has provided encouragement to EURUSD purchasers that the ECB has possibly reached its limit when it comes to easing monetary policy.
Follow Jameel on Twitter @Jameel_FXTM
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