Crude Oil Prices End Sharply Lower

Trading 10 oct 2018 Commentaire »

Crude oil prices drifted lower on Wednesday, amid prospects of a drop in crude demand due to weak global economic growth outlook.

With the International Monetary Fund lowering its forecast for global economic growth to 3.7%, from its earlier projection of 3.9%, and lowering Chinese economic growth 6.2% from 6.4%, for the current financial year, traders are betting on hopes crude oil demand will see a drop in the near term.

Escalating tensions between the U.S. and China too have raised concerns that global oil demand will decline in the near term.

Crude oil futures for November ended down $1.79, or 2.4%, at $73.17 a barrel. On Tuesday, crude oil futures ended up $0.67, or 0.9%, at $74.96 a barrel.

Crude oil prices eased despite reports that Hurricane Michael crashed into the Florida's northwestern Panhandle coast today, flooding towns and ripping up trees with 155 mile per hour winds. Due to platform evacuations and shut downs ahead of the Hurricane Michael, it is reported that more than one-third of natural gas output from the offshore U.S. Gulf of Mexico wells has been lost.

The weekly oil report from the American Petroleum Institute is due later in the day. The data from the Energy Information Administration is due on Thursday.


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Treasuries Show Modest Move Back To The Downside

Trading 10 oct 2018 Commentaire »

Following the rebound seen in the previous session, treasuries moved back to the downside during the trading day on Wednesday.

Bond prices regained some ground after coming under pressure early in the session but remained in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.7 basis points to 3.225 percent.

The early weakness among treasuries came following the release of a report from the Labor Department showing producer prices rose in line with economist estimates in the month of September.

The Labor Department said its producer price index for final demand increased by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to rise by 0.2 percent.

Excluding decreases in prices for food and energy, core producer prices still rose by 0.2 percent in September after slipping by 0.1 percent in August. The uptick in core prices also matched economist estimates.

The report also said the annual rate of producer price growth slowed to 2.6 percent in September from 2.8 percent in August, while the annual rate of core producer price growth accelerated to 2.5 percent from 2.3 percent.

Meanwhile, traders largely shrugged off the results of the Treasury Department's auctions of $36 billion worth of three-year notes and $23 billion worth of ten-year notes, which both attracted below average demand.

The three-year note auction drew a high yield of 2.989 percent and a bid-to-cover ratio of 2.56, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.85.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Meanwhile, the ten-year note auction drew a high yield of 3.225 percent and a bid-to-cover ratio of 2.39 compared to the average bid-to-cover ratio of 2.62 in the ten previous ten-year note auctions.

On Thursday, the Treasury is due to finish off this week's long-term securities auctions with the sale of $15 billion worth of thirty-year bonds.

Trading on Thursday may also be impacted by reaction to the Labor Department's reports on consumer price inflation and weekly jobless claims.


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Dollar Falling After Early Gains Evaporate

Trading 10 oct 2018 Commentaire »

The dollar got off to a positive start against its major rivals Wednesday, but has since pared its gains and turned lower. After a data drought at the start of the week, investors were presented with a pair of U.S. economic reports this morning.

With an increase in prices for services offsetting a modest drop in prices for goods, the Labor Department released a report on Wednesday showing producer prices in the U.S. rose in line with economist estimates in the month of September.

The Labor Department said its producer price index for final demand increased by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to rise by 0.2 percent.

A report released by the Commerce Department on Wednesday showed a bigger than expected increase in wholesale inventories in the U.S. in the month of August. The Commerce Department said wholesale inventories jumped by 1.0 percent in August after rising by 0.6 percent in July. Economists had expected wholesale inventories to climb by 0.8 percent.

The dollar rose to an early high of $1.1477 against the Euro Wednesday, but has since retreated to around $1.1525.

France's industrial production grew at the slowest pace in three months in August, the statistical office Insee showed Wednesday. Industrial production climbed 0.3 percent from July, the weakest since May when it remained flat. Production had increased 0.8 percent in July.

Britain's ITV News reported late Tuesday that a deal on a Brexit withdrawal agreement could be reached at the EU council next week, if the U.K. and the EU agree on Irish border issue.

Substantial progress in talks have been made on contentious Irish border "backstop," the report said, adding that the EU appeared close to agreeing that the backstop would apply to the whole UK, instead of N. Ireland alone - or at least it would apply to the whole UK for customs.

The buck reached an early high of $1.3135 against the pound sterling, but has since pulled back to around $1.32.

The UK economy stagnated in August as the increase in industrial production was offset by a contraction in construction and farm sectors, the Office for National Statistics reported Wednesday. Gross domestic product remained unchanged after expanding 0.4 percent in July. GDP was forecast to climb 0.2 percent.

The UK's merchandise trade deficit widened in August from the previous month and was bigger than economists expected, preliminary data from the Office for National Statistics showed on Wednesday. The visible trade deficit widened to GBP 11.19 billion from GBP 10.38 billion in July. Economists had expected a shortfall of GBP 10.8 billion.

The greenback climbed to a high of Y113.282 against the Japanese Yen Wednesday morning, but has since eased back to around Y112.550.

The total value of core machine orders in Japan spiked a seasonally adjusted 6.8 percent on month in August, the Cabinet Office said on Wednesday, worth 981.5 billion yen. That beat expectations for a decline of 3.9 percent following the 11.0 percent spike in July.


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Gold Futures Settle Higher For 2nd Straight Day

Trading 10 oct 2018 Commentaire »

Gold prices edged higher on Wednesday, as the dollar slipped against most major currencies and global equity markets drifted lower amid mounting concerns about economic growth.

The lowering of global economic growth forecast by the International Monetary Fund and weak economic data from China and the eurozone have prompted investors to seek the safe haven yellow metal.

The dollar edged lower against a basket of major currencies after the U.S. President Donald Trump criticized the Federal Reserve once again, saying he believes the central bank was moving too quickly with the rate hikes.

Trump also repeated a threat to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates for the recent levies and other measures.

The dollar index eased by 0.26 points, or 0.27%, to 95.10, after having advanced to 95.47 earlier.

Gold futures for December ended up $1.90, or 0.2%, at $1,193.40 an ounce. On Tuesday, gold futures for December ended up $2.90, or 0.2%, at $1,191.50 an ounce.

Silver futures for December settled at $14.326 an ounce, losing $0.074 for the session.

Copper futures for December declined $0.0260, to settle at $2.7805 per pound.

In its latest World Economic Outlook, the IMF forecast 3.7% growth for the world economy for this year and next, lower than the 3.9% growth predicted in the April report and in a July update. "Downside risks to global growth have risen in the past six months and the potential for upside surprises has receded," the global lender said in the report.

The IMF cautioned that an intensification of trade tensions, and the associated rise in policy uncertainty, could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade.

The US growth forecast for this year was retained at 2.4%, while the projection for next year was trimmed to 2.1% from 2.2% seen in July, citing the recently enacted trade tariffs. The IMF lowered its forecast for Chinese economic growth in 2019 to 6.2% from 6.4%, citing "negative effect of recent tariff actions."

In economic releases today, a report from Insee showed France's industrial production grew at the slowest pace in three months in August, climbing just 0.3% from July. Production had increased 0.8% in July.

The UK economy stagnated in August as the increase in industrial production was offset by a contraction in construction and farm sectors, the Office for National Statistics reported Wednesday. Gross domestic product remained unchanged after expanding 0.4% in July. GDP was forecast to climb 0.2%.

The UK's merchandise trade deficit widened in August from the previous month and was bigger than economists expected, preliminary data from the Office for National Statistics showed.

In the U.S., data from Labor Department showed producer prices rose in line with economist estimates in the month of September. The Labor Department said its producer price index for final demand increased by 0.2% in September after edging down by 0.1% in August.


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Ten-Year Note Auction Attracts Below Average Demand

Trading 10 oct 2018 Commentaire »

Following the auction of $36 billion worth of three-year notes earlier in the day, the Treasury Department sold $23 billion worth of ten-year notes on Wednesday, attracting below average demand.

The ten-year note auction drew a high yield of 3.225 percent and a bid-to-cover ratio of 2.39.

The Treasury also sold $23 billion worth of ten-year notes last month, drawing a high yield of 2.957 percent and a bid-to-cover ratio of 2.58.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous ten-year note auctions had an average bid-to-cover ratio of 2.62.

On Thursday, the Treasury is due to finish off this week's long-term securities auctions with the sale of $15 billion worth of thirty-year bonds.


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Three-Year Note Auction Attracts Below Average Demand

Trading 10 oct 2018 Commentaire »

A day later than usual due to the Columbus Day holiday on Monday, the Treasury Department sold $36 billion worth of three-year notes on Wednesday, attracting below average demand.

The three-year note auction drew a high yield of 2.989 percent and a bid-to-cover ratio of 2.56.

Last month, the Treasury sold $35 billion worth of three-year notes, drawing a high yield of 2.821 percent and a bid-to-cover ratio of 2.68.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous three-year note auctions had an average bid-to-cover ratio of 2.85.

Looking ahead, the Treasury is due to sell $23 billion worth of ten-year notes later today and $15 billion worth of thirty-year bonds on Thursday.


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Fundamental Analysis of USD/CAD for October 10, 2018

Trading 10 oct 2018 Commentaire »

USD/CAD is currently residing inside the resistance area between 1.2950 to 1.3050 area after recovering the previous bearish gap. CAD is struggling amid downbeat economic reports that encouraged USD strength.

Today US PPI report was published as expected at 0.2% increasing from the previous value of 0.1% and Core PPI also met expectation increasing to 0.2% from the previous negative value of -0.1%. As US President Donald Trump is against rapid rate hikes by the Federal Reserve, such remarks are certainly bearish for USD. Ahead of the CPI report to be published tomorrow, which is expected to be unchanged at 0.2%, USD may gain further over CAD if the reading meets expectation or performs better.

On the other hand, CAD Building Permits report was published with an increase to 0.4% from the previous negative value of -1.5% but it did not meet the expectation of 0.5%. Moreover, the Housing Starts report published recently showed a decrease to 189k from the previous figure of 199k which was expected to increase to 203k.

Meanwhile, USD is expected to dominate CAD in the coming days as CAD has been weighed down by fresh economic data. On the other hand, a positive CPI report is expected to inject further bullish momentum in the pair, triggering further upward pressure in the pair in the coming days until Canada presents solid economic data to counter strongly in the process.

Now let us look at the technical view. After certain bullish rejections from the resistance area between 1.2950-1.3050, the price is surprisingly extending its climb with an impulsive momentum which is expected to lead to further bullish pressure in the pair. Despite the current bullish momentum, further bullish pressure will only be confirmed after the price clears above 1.3050 with a daily close. As the price breaks above 1.3050, the bullish bias is expected to push the price higher with target towards 1.3300-50 area in the coming days.

SUPPORT: 1.2750, 1.2950

RESISTANCE: 1.3300-50

BIAS: BEARISH

MOMENTUM: VOLATILE

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U.S. Wholesale Inventories Jump More Than Expected In August

Trading 10 oct 2018 Commentaire »

A report released by the Commerce Department on Wednesday showed a bigger than expected increase in wholesale inventories in the U.S. in the month of August.

The Commerce Department said wholesale inventories jumped by 1.0 percent in August after rising by 0.6 percent in July. Economists had expected wholesale inventories to climb by 0.8 percent.

The bigger than expected increase in wholesale inventories came as inventories of non-durable goods surged up by 1.2 percent amid substantial increases in inventories of farm products, chemicals, and drugs.

Inventories of durable goods also climbed by 0.9 percent, partly reflecting a 3.5 percent spike in inventories of automotive products.

The Commerce Department also said wholesale sales increased by 0.8 percent in August after edging up by 0.2 percent in July.

Sales of durable goods jumped by 1.3 percent amid sharp increases in sales of computer equipment, professional equipment, and metals.

The report said sales of non-durable goods also rose by 0.5 percent, as notable increases in sales of apparel and miscellaneous non-durable goods were partly offset by a steep drop in sales of farm products.

With inventories and sales both climbing, the inventories/sales ratio for merchant wholesalers was unchanged from the previous month at 1.26.


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Fundamental Analysis of EUR/JPY for October 10, 2018

Trading 10 oct 2018 Commentaire »

EUR/JPY has been impulsive and non-volatile amid bearish pressure which led the price to reside at the edge of 129.50 support area with a daily close. ON the back of positive reports from the eurozone, EUR managed to push the price higher today but could not sustain the momentum it had throughout the day.

Today French Industrial Production report was published better than expected at 0.3% from a 0.8% decrease in the previous month but better than expectation of 0.1% and Italian Industrial Production increased to 1.7% from the previous value of -1.6% which was expected to be at 0.7%. Ahead of the French and German CPI, such positive economic reports are expected to provide the required momentum for EUR in the coming days.

On the other hand, Japan released mixed economic reports today did not quite manage to sustain the pressure it had over EUR recently. Today Japan's Core Machinery Orders report was published with a decrease to 6.8% from the previous value of 11.0% but managed to remain better than expectation of -3.9% and Prime Machine Tools Orders decreased to 2.8% from the previous value of 5.1%.

Meanwhile, EUR has been quite strong fundamentally ahead of CPI reports this week, whereas JPY having soft expectations of the upcoming reports may lead the market sentiment to derive away from the currency in the coming days. To sum up, EUR is expected to gain further momentum over JPY in the coming days if the upcoming reports remain consistently better.

Now let us look at the technical view. The price has been quite impressive with the bullish gains today which did not quite sustain at the momentum it had throughout the day. The price is currently expected to push higher upon another retest at 129.50. As the price remains above 129.50 with a daily close on the long-term basis, the price is expected to push higher towards 131.00-132.00 resistance area. On the other hand, if the price breaks below 129.50 area with a daily close, further bearish momentum is expected which might lead to 125.60 price area.

SUPPORT: 125.60, 129.50

RESISTANCE: 131.00, 132.00

BIAS: BULLISH

MOMENTUM: VOLATILE

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The material has been provided by InstaForex Company - www.instaforex.com

*U.S. Wholesale Inventories Jump 1.0% In August

Trading 10 oct 2018 Commentaire »

U.S. Wholesale Inventories Jump 1.0% In August


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