2019-11-11 • Updated
The euro suffered substantial losses overnight after we received softer than expected German and Spanish inflation releases. Decreasing inflation rate prove that the ECB still needs a very substantial degree of monetary policy accommodation and relieves markets superfluous idle talks about the QE tapering. The US economic data was a mixed bag with solid GDP figures and rising number of unemployment claims. EUR/USD dropped to 1.0675 overnight. The technical outlook for the pair is neutral. The prices will likely continue consolidating within the range of 1.0655 – 1.0690. Today traders will be watching for the euro area monthly inflation readings. Consensus forecasts indicate slight declines. The figures are usually scrutinized by the ECB officials trying to assess the sustainability of prices pressures. So, in case of disappointing headlines, the euro might head into the negative territory.
The yen was the main mover in the past trading sessions. USD/JPY spiked to 112.20 after we received a rather disappointing data on Japan’s household spending and core CPI. Then, USD lost its ground against the yen and slid to 111.80. US dollar watchers will be waiting for core PCE reading and personal spending data which are due at 12:30 MT time. The Chicago PMI and final University Michigan consumer sentiments are also expected tonight. Another focus will be on the speeches of Fed’s officials.
In the early hours of Tokyo morning, we got some comments from the Australian prudential regulator (APRA) on the growth in housing credit. Surging house prices have been a concern for the Australian government. APRA will try to tighten up lending for housing. What does this news mean for traders? It means that the Reserve Bank of Australia might cut rates further clipping Aussie’s wings. This news didn’t cause and outcry from AUD, but they should be taken into consideration as we approach the next RBA meeting. AUD/USD dropped to 0.7635, then, partially regained its losses having advanced to 0.7640. There is still a room for further expansion towards 0.7660/0.7680 levels.
GBP/USD rose to 1.2475 in the Asian session. Many analysts believe that the pound can still move higher in the near-term due to a squeeze on existing short GBP and investors’ disbelief in Trump’s ability to push through his pro-growth policies. The immediate resistance can be found at 1.2475. on the downside, there are plenty of supports at 1.2410, 1.2360. They might serve the good turn if today US data beats market’s expectations.
US dollar/loonie was trading choppily in the past sessions trying to imitate the movements of oil prices. USD/CAD dropped to 1.3320, then, regained its ground and rose to 1.3340. Brent oil futures slipped a few points in the Asian session having fallen to $52.80 from yesterday’s high at $53.10. A tailwind for oil was the Kuwait’s support of the prolongation of the OPEC-led production cut deal.
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.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
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.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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