Oil Futures Hit Near 4-year Closing High On Supply Concerns

Trading 01 oct 2018 Commentaire »

Crude oil futures rose to their highest settlement price in nearly four years on Monday, lifted by news about the U.S., Canada and Mexico reaching a trade agreement and on declining oil exports from Iran.

Reports about supply disruptions in Venezuela too aided crude's uptick.

The U.S. sanctions on Iran will commence next month. With OPEC members not keen on increasing output, it remains to be seen how the oil producing nations will plan to fix the demand - supply gap.

After a meeting on September 23, OPEC members and top non-OPEC oil producers said they were in no rush to increase output.

According to reports, the U.S. President Donald Trump called Saudi Arabia's King Salman on Saturday to discuss ways to maintain sufficient supply post implementation of sanctions against Iranian oil.

Last week, the U.S. Energy Secretary Rick Perry reportedly said that the U.S. will not open up its strategic petroleum reserves to offset the decrease in production post sanctions on Iranian oil.

Crude oil futures for November ended up $2,05, or 2.8%, at $75.30 a barrel, the highest settlement since November 2014.

On Friday, crude oil futures settled up $1.13, or 1.6%, at $73.25 a barrel.

Last week EIA's report showed an unexpected jump in U.S. crude stockpiles in the week ended September 21. The data showed crude stockpiles to have risen by nearly 1.9 million barrels in the week, as against an expected drop of over 2 million barrels. The report also said U.S. crude production hit a record 11.1 million bpd in the week.


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Treasuries Move To The Downside Amid Easing Trade Concerns

Trading 01 oct 2018 Commentaire »

After closing roughly flat for two consecutive sessions, treasuries moved to the downside during the trading day on Monday.

Bond prices moved lower early in the day and remained firmly negative throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.4 basis points to 3.080 percent.

The weakness among treasuries came amid easing trade concerns after U.S. and Canadian officials agreed on a trade deal to replace the North American Free Trade Agreement shortly before a midnight deadline.

The new trade deal, called the United States-Mexico-Canada Agreement, or USMCA, will reportedly provide more market access to U.S. dairy farmers and effectively cap Canadian automobile exports to the U.S.

A joint statement by U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said the agreement will "strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home."

President Donald Trump, a harsh critic of NAFTA, also praised the USMCA as a "historic transaction" in a post on Twitter on Monday.

"It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world," Trump tweeted.

The leaders of the U.S., Canada, and Mexico are expected to sign the new agreement before the end of November, although it will still need to be approved by Congress.

Meanwhile, traders largely shrugged off a report from the Institute for Supply Management showing a modest slowdown in the pace of growth in the U.S. manufacturing sector.

The ISM said its purchasing managers index fell to 59.8 in September from 61.3 in August, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.3.

The slightly bigger than expected decrease by the index came after it reached its highest level in over fourteen years in the previous month.

Amid a quiet day on the U.S. economic front, trading on Tuesday may be impacted by reaction to remarks by Federal Reserve Chairman Jerome Powell and Fed Vice Chairman Randal Quarles.


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Dollar Mixed After Trade Agreement

Trading 01 oct 2018 Commentaire »

The dollar is turning in a mixed performance against its major rivals Monday afternoon. Traders are breathing a sigh of relief after U.S. and Canadian officials agreed on a trade deal to replace the North American Free Trade Agreement shortly before a midnight deadline.

The new trade deal, called the United States-Mexico-Canada Agreement, or USMCA, will reportedly provide more market access to U.S. dairy farmers and effectively cap Canadian automobile exports to the U.S.

A joint statement by U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said the agreement will "strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home."

Partly reflecting supply chain issues, the Institute for Supply Management released a report on Monday showing a slightly bigger than expected slowdown in the pace of growth in the U.S. manufacturing sector in the month of September.

The ISM said its purchasing managers index fell to 59.8 in September from 61.3 in August, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.3.

With a jump in spending on public construction largely offset by a drop in spending on private construction, the Commerce Department released a report on Monday showing construction spending in the U.S. ticked up by much less than expected in the month of August.

The Commerce Department said construction spending inched up by 0.1 percent to an annual rate of $1.319 trillion in August after rising by 0.2 percent to an upwardly revised $1.317 trillion in July. Economists had expected construction spending to climb by 0.5 percent compared to the 0.1 percent uptick originally reported for the previous month.

The dollar fell to a low of $1.1627 against the Euro Monday morning, but has since rebounded to around $1.1575.

The euro area unemployment rate dropped to the lowest since November 2008, Eurostat reported Monday. The jobless rate fell to 8.1 percent in August from 8.2 percent in July. This was the lowest since November 2008. In the same period last year, the unemployment rate was 9 percent.

Eurozone manufacturing activity grew at the weakest pace in two years in September, final data from IHS Markit showed Monday.

The factory Purchasing Managers' Index fell to 53.2, the lowest since September 2016, from 54.6 in August. The initial estimate was 53.3. Nonetheless, the sector expanded the current period of expansion to 63 months.

Germany's retail sales increased at a faster pace in August driven by higher food and non-food product turnover, figures from Destatis showed Monday. Retail sales grew by real 1.6 percent year-on-year in August, faster than the 0.9 percent expansion seen a month ago. The annual rate came in line with expectations.

The buck dropped to a low of $1.3114 against the pound sterling Monday, but has since bounced back to around $1.3040.

The UK manufacturing sector expanded at a faster pace in September as growth in output and new orders gained traction, survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed Monday.

The manufacturing Purchasing Managers' Index rose unexpectedly to 53.8 in September from 53.0 in August. The score was forecast to drop to 52.5 from August's initially estimated 52.8.

UK mortgage approvals increased to a six-month high in August, the Bank of England reported Monday. The number of mortgages approved in August rose unexpectedly to 66,440 from 65,156 in July. The expected level was 64,500.

The greenback has climbed to an 11-month high of Y113.990 against the Japanese Yen Monday, from an early low of Y113.684.

The manufacturing sector in Japan continued to expand at a steady pace in September, the latest survey from Nikkei revealed on Monday with a manufacturing PMI score of 52.5. That's unchanged from the previous month, and it remains well above the boom-or-bust line of 50 that separates expansion from contraction.


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Gold Futures Settle Lower As Dollar Edges Up

Trading 01 oct 2018 Commentaire »

Gold prices edged lower on Monday, as the U.S. dollar moved up against major currencies, with traders betting on hopes the Federal Reserve will tighten its monetary policy over the coming months.

Last week, the Fed raised the interest rate by 25 basis points and signaled another hike in December this year and three more increases in 2019, if the economy continues to register strong growth.

Trade fears have eased following the U.S. and Canada reaching an agreement on a framework North American Free Trade Agreement deal, just before the deadline of midnight of September 30.

The new deal, called the United States-Mexico-Canada Agreement, would permit more U.S. access to Canada's dairy market and restricts its car exports to Washington.

"It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home," said US Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland in a joint statement.

Gold futures for December ended down $4.50, or 0.4%, at $1,191.70 an ounce.

On Friday, gold futures for December ended up $8.80, or 0.70%, at $1,196.20 an ounce, bouncing back strongly after falling to a six-week low a session earlier.

Silver futures for December ended at $14.507 an ounce, down $0.205 for the session.

Copper futures for December settled at $2.7875 per pound, down $0.0175 from previous close.

The dollar index rose to 95.00 and is still holding firm at 94.91, up 0.11 points, or 0.12% from previous close.


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U.S. Construction Spending Shows Slight Uptick In August

Trading 01 oct 2018 Commentaire »

With a jump in spending on public construction largely offset by a drop in spending on private construction, the Commerce Department released a report on Monday showing construction spending in the U.S. ticked up by much less than expected in the month of August.

The Commerce Department said construction spending inched up by 0.1 percent to an annual rate of $1.319 trillion in August after rising by 0.2 percent to an upwardly revised $1.317 trillion in July.

Economists had expected construction spending to climb by 0.5 percent compared to the 0.1 percent uptick originally reported for the previous month.

The modest increase in construction spending came as spending on public construction surged up by 2.0 percent to a rate of $316.7 billion in August from $310.5 billion in July.

Spending on educational construction jumped by 1.0 percent to a rate of $72.3 billion, while spending on highway construction spiked by 1.7 percent to a rate of $99.0 billion.

On the other hand, the report said spending on private construction fell by 0.5 percent to a rate of $1.002 trillion in August from $1.007 trillion in July.

While spending on residential construction slid by 0.7 percent to a rate of $548.9 billion, spending on non-residential construction edged down by 0.2 percent to a rate of $452.9 billion.

Meanwhile, the Commerce Department said total construction spending in August was up by 6.5 percent compared to the same month a year ago.


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Global macro overview for 01/10/2018

Trading 01 oct 2018 Commentaire »

September's PMI index for the British industrial sector pointed to an increase to 53.8 from 53 in August after correction, while it was expected to fall to 52.5. The data is primarily in contrast to the gloomy readings from Euroland, however, the GBP does not find any impulse for growth in the report. First of all, the industrial sector is not large in the UK, where 75% of GDP generates services. Secondly, the Brexit issue now counts for the pound, where there has been no progress in negotiations recently.

In the other news, GBP remains sensitive primarily to information about the Brexit agreement and today another surprise bargains. The financial media quotes a representative of the British administration, according to which the London government is preparing a compromise solution on the rules of the flow of goods on the border between Ireland and Northern Ireland. This is the most sensitive topic for both sides of the negotiations, so the chances of agreement on this issue significantly increase the probability of a final settlement.

Let's now take a look at the GBP/USD technical picture at the H4 time frame after the data were published. At first the market tried to rally higher and broke above the local technical resistance at the level of 1.3107 and made a local high at the level of 1.3115, which was just above the 50% Fibo retracement. But then, the bears took contol over the market nad now the price is falling towards the support around the level of 1.3000. The market conditions are oversold, but the negative and weak momentum support the short-term bearish outlook.

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U.S. Manufacturing Index Pulls Back Off 14-Year High In September

Trading 01 oct 2018 Commentaire »

Partly reflecting supply chain issues, the Institute for Supply Management released a report on Monday showing a slightly bigger than expected slowdown in the pace of growth in the U.S. manufacturing sector in the month of September.

The ISM said its purchasing managers index fell to 59.8 in September from 61.3 in August, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.3.

The slightly bigger than expected decrease by the index came after it reached its highest level in over fourteen years in the previous month.

A slowdown in the pace of new orders growth contributed to the pullback by the headline index, with the new orders index sliding to 61.8 in September from 65.1 in August.

"Customer demand expansion softened slightly this month but continued to expand at high levels," said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee.

While the report also said the supplier deliveries index dropped to 61.1 in September from 64.5 in August, a reading above 50 still indicates slower deliveries.

"This is the 24th straight month of slowing supplier deliveries and indicates the supply chain's difficulty in keeping up with new order and production demand," Fiore said.

He added, "Lead times continue to extend, supply chain labor issues continue to restrict performance, and transportation issues are limiting supplier execution."

Meanwhile, the ISM said the production index inched up to 63.9 in September in from 63.3 in August, reaching its highest level since January.

The employment index also crept up to 58.8 in September from 58.5 in the previous month, indicating a slight acceleration in the pace of job growth in the manufacturing sector.

On the inflation front, the report said the prices index tumbled to 66.9 in September from 72.1 in August, pointing the slowest pace of price growth since last November.

"Demand remains robust, but employment resources and supply chains continue to struggle, but to a lesser degree," said Fiore.

He added, "Respondents are again overwhelmingly concerned about tariff-related activity, including how reciprocal tariffs will impact company revenue and current manufacturing locations."

The ISM is scheduled to release a separate report on activity in the service sector in the month of September on Wednesday. The non-manufacturing index is expected to edge down to 58.3 in September from 58.5 in August.


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Dollar Little Changed After ISM Survey, Construction Spending

Trading 01 oct 2018 Commentaire »

At 10:00 am ET Monday, U.S. construction spending for August and ISM manufacturing index for September have been released.

After these reports, the greenback changed little against its major rivals.

The greenback was trading at 113.91 against the yen, 0.9835 against the franc, 1.1606 against the euro and 1.3078 against the pound around 10:01 am ET.


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*U.S. Construction Spending Inches Up 0.1% In August

Trading 01 oct 2018 Commentaire »

U.S. Construction Spending Inches Up 0.1% In August


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*ISM U.S. Purchasing Managers Index Drops To 59.8 In September

Trading 01 oct 2018 Commentaire »

ISM U.S. Purchasing Managers Index Drops To 59.8 In September


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