Oil Tumbles As Russia, Saudi Arabia Plan To Increase Output

Trading 04 oct 2018 Commentaire »

Crude oil prices came off four-year highs on Thursday, dragged down by reports suggesting Russia and Saudi Arabia have struck a private deal to raise crude output.

The recent data from the U.S. Energy Information Administration showed domestic crude supplies to have surged by about 8 million barrels to about 404 million barrels in the week ended September 28. That was the largest weekly climb since March 2017.

In the week ended September 21, crude stockpiles had increased by 1.9 million barrels, after five consecutive weeks of declines.

According to EIA, gasoline stockpiles fell by 500,000 barrels last week, while distillate stockpiles declined by 1.8 million barrels. The agency also said that supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 1.699 barrels last week.

Crude oil futures for November delivery ended down $2.08, or 2.7%, at $74.33 a barrel. That was crude's worst single-session loss in about three weeks.

On Wednesday, crude oil futures ended up $1.18, or 1.6%, at $76.41 a barrel.

According to reports, Russia and Saudi Arabia, after a series of private meetings last month, struck a deal, to raise oil production from September through December to cool rising prices and to help offset loss of Iranian oil to some extent.

After withdrawing from the nuclear deal in May, the United States started reimposing sanctions on the Iranian economy that were lifted under the deal in exchange for curbs on Tehran's nuclear program. The next round of sanctions, targeting Iran's oil exports, will come into effect in early November.


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Gold Settles Lower, As Treasuary Yields Jump

Trading 04 oct 2018 Commentaire »

Gold prices edged lower for a second straight session on Thursday, as U.S. treasury yields rose to the highest levels in about seven years, after the latest batch of economic data increased the likelihood of the Federal Reserve resorting to more aggressive monetary tightening.

It is widely expected that the Fed would hike interest rate by 25 basis points in December this year, and announce three more increases in 2019.

Equity markets tumbled amid mounting worries about U.S.-China trade dispute and its impact on the global economy.

Gold futures for December ended down $1.30, or 0.1%, at $1,201.60 an ounce.

On Wednesday, gold futures ended down $4.10, or 0.3%, at $1,202.90 an ounce.

Silver futures for December declined by $0.080, to $14.590 an ounce.

Copper futures for December settled at $2.7775 per pound, losing $0.0565 for the session.

The developments in Italy are being closely watched by investors across the globe.

The Italian coalition government, which needs to obtain European authorities' approval to keep the 2019 deficit level at 2.4%, has set a budget deficit target of 2.1% of GDP for 2020 and 1.8% of GDP in 2021.

Speaking at the Atlantic Festival in Washington, D.C. after the close of trading on Wednesday, the Federal Reserve Chief Jerome Powell said that interest rates "are a long way from neutral" even after recent increases.

"The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don't need those anymore. They're not appropriate anymore," Powell told Judy Woodruff of PBS.

"Interest rates are still accommodative, but we're gradually moving to a place where they will be neutral," he said, and added, "We may go past neutral, but we're a long way from neutral at this point."

In economic news today, the U.S. Labor Department released a report showing a bigger than expected drop in initial jobless claims in the week ended September 29th. The report said initial jobless claims fell to 207,000, a decrease of 8,000 from the previous week's revised level of 215,000. Economists had expected jobless claims to edge down to 213,000 from the 214,000 originally reported for the previous week.

Meanwhile, data from the Commerce Department showed a bigger than expected 2.3% jump in factory orders in the month of August. In July, order were down by a revised 0.5%.


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Dollar Weakens As Rising Yields Spark Rate Hike Concerns

Trading 04 oct 2018 Commentaire »

The dollar is losing ground against its major rivals Thursday afternoon after a recent jump by U.S. treasury yields raised concerns about the outlook for interest rates. With the ten-year yield reaching its highest levels in over seven years, traders seem worried the Federal Reserve may raise rates more aggressively than currently anticipated.

With the release of the closely watched monthly jobs report looming, the Labor Department released a report on Thursday showing a bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended September 29th.

The Labor Department said initial jobless claims fell to 207,000, a decrease of 8,000 from the previous week's revised level of 215,000. Economists had expected jobless claims to edge down to 213,000 from the 214,000 originally reported for the previous week.

After reporting a pullback in new orders for U.S. manufactured goods in the previous month, the Commerce Department released a report on Thursday showing a substantial rebound in factory orders in the month of August.

The Commerce Department said factory orders surged up by 2.3 percent in August after falling by a revised 0.5 percent in July. Economists had expected factory orders to jump by 2.1 percent compared to the 0.8 percent drop originally reported for the previous month.

The dollar rose to an early high of $1.1463 against the Euro Thursday, but has since retreated to around $1.1510.

The German construction sector saw a loss of growth momentum in September, data from IHS Markit revealed Thursday. The construction Purchasing Managers' Index came in at 50.2 in September, down from 51.5 in August. A score above 50 indicates expansion.

The buck has pulled back to around $1.3015 against the pound sterling Thursday afternoon, from an early high of $1.2921.

The greenback has dropped to around Y113.765 against the Japanese Yen Thursday afternoon, from an early high of Y114.521.


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Treasury Announces Details Of Next Week's Long-Term Securities Auctions

Trading 04 oct 2018 Commentaire »

On Thursday, the Treasury Department announced the details of next week's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury said it plans to sell $36 billion worth of three-year notes and $23 billion worth of ten-year notes next Wednesday and $15 billion worth of thirty-year bonds next Thursday.

Last month, the Treasury sold $35 billion worth of three-year notes, $23 billion worth of ten-year notes and $15 billion worth of thirty-year bonds.

The three-year note auction attracted below average demand, while the ten-year and thirty-year bond auctions attracted average demand.


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Global macro overview for 04/10/2018

Trading 04 oct 2018 Commentaire »

Yields of 10-year US Treasury bonds jumped yesterday 12 bps to 3.18%, and today added another 5 bp. Such a high-interest rate has not been since 2011. In the case of 30-year-olds, the 30-year peaks have been established at 3.38 %. The unprecedented move came from the interruption of the overall calmness in which the market has been in place for weeks, without responding to a wave of positive information. It seems that you can not end the strong surprises in the macro data without saying that "it's already in the price". Yesterday, however, was a special day of combining hit. Strong ADP readings and the ISM index for services from the US raise expectations before Friday's NFP report. Moreover, the Fed president Jerome Powell said that he is "very pleased" with the economic developments and the Fed may raise interest rates even above the neutral level. Finally, technical aspects have accelerated the increase in profitability. The combined impact of these three factors determined the scale of the profitability rally. From the side of foundations, it is important, however, that the market is finally beginning to believe that the Fed is ready to raise rates more than three times (in December and twice in 2019). And not just because the Fed promises so: the economy does not slow down and real wage and inflationary pressures are becoming real. The first one is additionally conquered by Amazon's declarations of increasing the minimum wage, the second - unrelenting oil prices.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market spiked higher towards the technical resistance at the level of 96.12, but was capped there and now is testing the broken technical support at the level of 95.56. The market conditions are clearly overbought and there is a visible bearish divergence between the price and the momentum oscillator, which indicates a possible pull-back towards the level of 95.26.

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Global macro overview for 04/10/2018

Trading 04 oct 2018 Commentaire »

British Prime Minister, Theresa May, will meet representatives of the European Union for a joint dinner on October 17. According to commentators, it is then that the finalization of the Brexit agreement will be finalized, which could be signed by both parties a month later.

The May administration would like to ratify the Secession Agreement two weeks after its signature. This would mean that the British Parliament would have really little time to make any amendments to the agreement, which turned out to be more complicated than it seemed.

After a series of failures and crises, it seems that both sides have finally found a common language and agreement on the UK leaving the European Union will finally be signed. Since the memorable referendum in June 2016, we have had a situation on several occasions in which it seemed that both sides would not want to compromise. One of the last risk factors of the border issue was with remaining Ireland in the Union.

May must fight with both Brexit supporters and opponents. The former accuse the prime minister of the fact that the terms of secession established by her administration are unacceptable. Euro-enthusiasts, in turn, do not want to hear about Brexit and demand a second referendum on this matter.

The biggest threat to May is the possibility of not being supported by her own political party. In theory, the opposition of just seven Tories could have put an end to the work on the contract. Jacob Rees-Mogg, who leads the party's European Research Group, warns that he is able to convince even 80 parliamentarians that they will reject the proposals of the May administration.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. The market has hit the 38% Fibo retracement of th previous swing down at the level of 1.3034, but the bears are now pushing the price back down again. The nearest support is seen at the level of 1.2977 and 1.2964, but the momentum is still below its fifty level, so the move down is still more probable.

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U.S. Factory Orders Surge Up More Than Expected In August

Trading 04 oct 2018 Commentaire »

After reporting a pullback in new orders for U.S. manufactured goods in the previous month, the Commerce Department released a report on Thursday showing a substantial rebound in factory orders in the month of August.

The Commerce Department said factory orders surged up by 2.3 percent in August after falling by a revised 0.5 percent in July.

Economists had expected factory orders to jump by 2.1 percent compared to the 0.8 percent drop originally reported for the previous month.

The rebound in factory orders came as durable goods orders spiked by 4.4 percent in August after tumbling by 1.2 percent in July.

Orders for transportation equipment led the recovery, soaring by 13.1 percent in August after plunging by 3.6 percent in July.

Excluding orders for transportation equipment, factory orders inched up by 0.1 percent for the second consecutive month.

The Commerce Department said orders for non-durable goods edged up by 0.2 percent in August after ticking up by 0.1 percent in July.

The report also said shipments of manufactured goods rose by 0.5 percent in August after coming in virtually unchanged in July.

Meanwhile, inventories of manufactured goods dipped by 0.1 percent in August after climbing by 0.9 percent in the previous month.

With shipments rising and inventories falling, the inventories-to-shipments ratio pulled back to 1.34 in August from 1.35 in July.


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Loonie Little Changed Following Canada Ivey PMI

Trading 04 oct 2018 Commentaire »

At 10:00 am ET Thursday, Canada Ivey PMI for September has been released. Following the data, the loonie changed little against its major counterparts.

The loonie was trading at 88.54 against the yen, 0.9120 against the aussie, 1.2877 against the greenback and 1.4829 against the euro around 10:02 am ET.


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Dollar Little Changed After U.S. Factory Orders

Trading 04 oct 2018 Commentaire »

After the release of U.S. factory orders for August at 10.00 am ET Thursday, the greenback changed little against its major counterparts.

The greenback was trading at 114.03 against the yen, 0.9921 against the franc, 1.3014 against the pound and 1.1514 against the euro around 10:02 am ET.


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*U.S. Factory Orders Surge Up 2.3% In August

Trading 04 oct 2018 Commentaire »

U.S. Factory Orders Surge Up 2.3% In August


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