Dollar Soften, Oil Consolidates Ahead Of Thanksgiving
A softer global growth outlook, a trade standoff between US and China, a fading US fiscal stimulus post midterm election, and a volatile market condition have worked together to influence Fed’s willingness and ability to stay on track of its quarterly rate hike trajectory towards 2019. Markets suspect that the central bank may stop rate hiking as early as 1H19 if economic fundamentals deteriorate and growth momentum starts to slow down in the US. This paves way for a major inflection of US dollar’s performance in the weeks to come, as the foundation of strong dollar is fading if Fed decides to stall or reverse the normalisation.
US dollar index retraced moderately this morning, trading at the 96.6 area. EUR/USD advanced 0.12% yesterday and is little changed this morning at 1.138 area. Ongoing Italian budget disputes and Brexit uncertainty are the two political factors that suppresses the bloc currency. GBP/USD continued to consolidate towards the 1.277 area, with the next support level likely to be found at 1.270 area. A non-deal Brexit, although the likelihood is small, stands to impose a big tail-risk for the currency. Wobble political situation in the UK cabinet and complicated prospect of the withdrawal deal is probably going to overshadow sterling for an extended period.
AUD/USD rose 0.66% yesterday and retraced mildly to the 0.7254 area this morning. The commodity currency has broken out above a downward channel in the daily chart, forming a ‘double bottom’ pattern recently. This suggest the overall trend has bottomed up and started to swing upwards. Immediate support and resistance can be found at around 0.7224 and 0.7291 area respectively.
US markets will shut tonight and close early tomorrow for the Thanksgiving Day. Black Friday and Cyber Monday sales will draw attention to US retail and consumer market, with rising e-commerce market share potentially a bright spot this year.
Brent Crude oil price rebounded mildly from a 10-month low to the $63.5 area, lifting the energy sector’s performance. The overall price trending, however, remains bearish as a series of lower highs and lower lows were formed since early Oct. This week’s US DoE Petroleum Status Report shows that the commercial oil inventory increased 4.85 million barrels last week, more than 3.34 million that earlier expected. The stockpile has been built for eight consecutive weeks, adding on glut concerns. Before we hear any positive breakthrough from OPEC+ to slash output, oil prices are likely to remain subdued.
Single’s Day, Cyber Monday and Black Friday Sales 2011-2018
Source: Business Insider, Google
By Margaret Yang in Singapore
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(By CMC Markets)
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