The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Morning brief for June 8
2019-11-11 • Updated
Currency ranges in Tokyo morning were subdued as traders take a time out ahead of an onslaught of major events today including a general snap election in the UK, an ECB monetary policy meeting, and testimony by James Comey, the former FBI director.
The US dollar index remains at its eight-months low as investors lost faith in Trump’s ability to push through his stimulus plans. There is an impeachment heaving in sight as James Comey in his written statement deposed to a fact that Donald Trump did ask him to drop an investigation of former national security adviser Michael Flynn as part of a probe into Russia’s interference in the US presidential elections. His oral testimony may strengthen an impeachment case build on obstruction of justice, but first, prosecutors should prove that incumbent US President Donald Trump acted with corrupt intent.
EUR/USD is trading range bound near 1.2560 before the ECB meeting and Mario Draghi’s press conference scheduled for 2:45 and 3:30 pm (MT time) respectively. ECB’s policymakers are up to announce a “no change” to their monetary policy settings and probably to upgrade their economic assessment and policy guidance with regards to Eurozone in lights of strengthening of its economic fundamentals. The inflation forecast would be cut to 1,5% for this year from 1.7% as the lower prices one energy source might be taken into account. A “no change” decision without any hints of bank’s intention to remove the reference to lower rates, or change its extremely dovish tone to an at least hawkish one will likely weigh on the EUR.
Another threat event of today is a snap election in the UK. GBP holds firm above 1.2950 due to incoming polls indicating that Tories are on course to win the election with a decent majority. Yet the traders remain concerned ahead of the election outcome as Conservative party’ s lead over its major rival Labour party has been narrowing throughout the campaign. Theresa May called the snap election in April seeking to strengthen her position in the talks with EU officials over Brexit, but the internal Tory backlash over the failures of her campaign as well as horrific terrorist attacks made her position more vulnerable, more perilous than before. GBP/USD is trading at 1.2960. There is a slight upside bias. The pound may extend its gains towards 1.3000/1.3050 resistance levels. If Tories fail to gain a solid ground in the election, we will see the pair tumbling to the much lower levels – 1.2880, 1.2770. If they manage to win a solid majority, we will easily see a surge in the GBP.
The yen has strengthened against the USD in Tokyo morning despite disappointing final GDP that came from Japan. Investors raised their demand for this safe-haven currency ahead of the numerous risky events and on the increased Qatari activity and North Korea’s missile tests. USD/JPY is trading at 109.45. There is a room for the further weakness of the greenback. The quotes may move towards the supports at 109, 108.70.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
The EUR/USD pair is making gains, approaching multi-month highs around 1.0960, driven by a weakened USD and Christine Lagarde's somewhat hawkish remarks before the European Parliament. Minor housing data from the U.S., specifically New Home Sales for October, came in below expectations but didn't significantly impact the pair. Lagarde, President of the...
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Brent crude futures is maintaining stability this Friday, with traders awaiting an OPEC+ meeting that might lead to further supply cuts. Brent crude was down 8 cents at $81.34 a barrel, following a 0.7% drop in the previous session.