Oil Futures End Sharply Higher After OPEC Decides To Cut Production

Trading 07 déc 2018 Commentaire »

Crude oil prices surged higher on Friday after OPEC and non-OPEC members reached an agreement to cut crude production next year.

Oil prices had stayed weak early on in the session amid doubts over whether the OPEC will decide on a reduction in crude oil production.

On the third day of their meeting in Vienna, OPEC members decided to reduce oil production by a total of 800,000 barrels per day, from October levels. Non-OPEC nations, led by Russia, agreed to reduce output by 400,000 barrels per day. The proposed reduction of 1.2 million barrels per day, is much more than the anticipated cut of about 1 million barrels per day.

Earlier, there was talk of a 1.4 million barrel cut, but media reports suggested that Saudi Arabia was keen for a cut of only 1 million barrels.

According to reports, the agreement is for six months, with a review scheduled in April 2019.

Crude oil futures for January ended up $1.12, or 2.2%, at $52.61 a barrel.

On Thursday, crude oil futures settled at $51.49 a barrel, down $1.40, or 2.7%, from Wednesday's close. For the week, crude oil futures gained about 3.3%.

Higher crude production from the U.S., possible drop in crude oil demand in the near term due to the ongoing trade war between the U.S. and China and the Trump administrations decision to allow eight top buyers of crude oil to continue buying oil from Iran, all contributed to Oil's sharp slide in recent weeks.


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

Treasuries Show Notable Rebound From Early Weakness

Trading 07 déc 2018 Commentaire »

After coming under pressure early in the session, treasuries showed a notable turnaround over the course of the trading session on Friday.

Bond prices climbed well off their worst levels of the day and into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 2.850 percent after reaching a high of 2.910 percent.

With the downturn on the day, the ten-year yield extended a recent downward move, hitting its lowest closing level in over three months.

The rebound by treasuries came as traders moved their money into relative safety of bonds amid another sell-off on Wall Street.

Stocks moved sharply lower after the Labor Department's closely watched monthly jobs report showed U.S. employment increased by much less than expected in the month of November.

The Labor Department said non-farm payroll employment rose by 155,000 jobs in November after surging up by a downwardly revised 237,000 jobs in October.

Economists had expected employment to climb by about 200,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate in November remained unchanged for the second straight month at 3.7 percent, holding at its lowest level since hitting 3.5 percent in December of 1969.

Average hourly employee earnings rose by $0.06 to $27.35 in November, reflecting a 3.1 percent increase compared to the same month a year ago. The annual rate of growth was unchanged from October.

"The slightly more modest 155,000 gain in payroll employment in November may not go down well in markets given the heightened nervousness in recent months," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

"But this is still a solid gain that suggests economic growth is gradually slowing back towards its potential pace," he added. "There is nothing here to suggest the economy is suffering a more sudden downturn."

Lingering skepticism about a U.S.-China trade agreement also weighed on stocks even though President Donald Trump tweeted, "China talks are going very well!"

Following the slew of U.S. economic data released over the past couple days, the economic calendar for next week is relatively light.

Traders are still likely to keep a close eye on reports on retail sales, industrial production, and producer and consumer price inflation.

Bond trading may also be impacted by reaction to the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury is due to sell $38 billion worth of three-year notes next Tuesday, $24 billion worth of ten-year notes next Wednesday and $16 billion worth of thirty-year bonds next Thursday.


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

U.S. Consumer Credit Spikes More Than Expected In October

Trading 07 déc 2018 Commentaire »

A report released by the Federal Reserve on Friday showed a substantial increase in U.S. consumer credit in the month of October.

The report said consumer credit spiked by $25.4 billion in October after climbing by an upwardly revised $11.6 billion in September.

Economists had expected consumer credit to jump by $17.0 billion compared to the $10.9 billion increase originally reported for the previous month.

The Fed said non-revolving credit such as student loans and car loans surged up by $16.2 billion in October after advancing by $11.9 billion in September.

Revolving credit, which largely reflects credit card debt, also rose by $9.2 billion in October after edging down by $0.3 billion in September.

Compared to the same month a year ago, consumer credit in October was up by 7.7 percent, as revolving and non-revolving credit increased by 10.7 percent and 6.7 percent, respectively.


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

*U.S. Consumer Credit Spikes $25.4 Billion In October

Trading 07 déc 2018 Commentaire »

U.S. Consumer Credit Spikes $25.4 Billion In October


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

Gold Settles Notably Higher, Gains 2.2% For The Week

Trading 07 déc 2018 Commentaire »

Gold prices moved higher on Friday, as the dollar slipped against major currencies amid speculation the Federal Reserve will pause its interest rate hike agenda in the coming year.

Chances of the Fed pausing monetary tightening in the foreseeable future have increased following the release of the Labor Department's monthly jobs report that showed a much less than expected addition in U.S. employment in the month of November.

Mounting worries about U.S.-China trade tensions after the recent arrest of Huawei Technologies Co.'s Chief Financial Officer in Canada for potential violations of U.S. sanctions on Iran and falling equities also aided the yellow metal's uptick.

The dollar index was down by about 0.15% at 96.61.

Gold futures for February ended up $9.00, or 0.7%, at $1,252.60 an ounce, the highest settlement in nearly five months. On Thursday, gold futures ended up $1.00, or 0.08%, at $1,243.60 an ounce.

Gold futures gained about 2.2% for the week, the best returns in more than three months.

Silver futures for March settled at $14.696 an ounce, gaining $0.187 for the session.

Copper futures for March ended at $2.759 per pound, up $0.016 from previous close.

Chances of the Fed pausing monetary tightening in the foreseeable future have increased following the release of the Labor Department's monthly jobs report today. The report showed U.S. employment increased by much less than expected in the month of November.

According to the report, non-farm payroll employment rose by 155,000 jobs in November, after surging up by a downwardly revised 237,000 jobs in October. Economists had expected employment to climb by about 200,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate in November remained unchanged for the second straight month at 3.7%, holding at its lowest level since hitting 3.5% in December of 1969.


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

Dollar Trading Mixed After Jobs Report Disappoints

Trading 07 déc 2018 Commentaire »

The dollar is turning in a mixed performance against its major rivals Friday afternoon, but remains little changed overall. The release of the weaker than expected November jobs report this morning has investors feeling uncertain about the pace of Fed rate hikes next year.

After reporting strong job growth in the previous month, the Labor Department released a report Friday morning showing employment in the U.S. increased by much less than expected in the month of November.

The report said non-farm payroll employment rose by 155,000 jobs in November after surging up by a downwardly revised 237,000 jobs in October. Economists had expected employment to climb by about 200,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate in November remained unchanged for the second straight month at 3.7 percent, holding at its lowest level since hitting 3.5 percent in December of 1969.

A preliminary report released by the University of Michigan on Friday showed U.S. consumer sentiment has held steady in the month of December. The report said the consumer sentiment index for December came in at 97.5, unchanged from the final November reading. Economists had expected the index to dip to 97.0.

Wholesale inventories in the U.S. increased by slightly more than anticipated in the month of October, according to a report released by the Commerce Department on Friday. The Commerce Department said wholesale inventories advanced by 0.8 percent in October after climbing by an upwardly revised 0.7 percent in September.

Economists had expected inventories to rise by 0.7 percent compared to the 0.4 percent increase originally reported for the previous month.

The dollar has dropped to around $1.14 against the Euro Friday afternoon, from an early high of $1.1360.

Eurozone's economic growth rate halved in the third quarter as estimated initially, latest figures from the Eurostat showed on Friday. Gross domestic product grew 0.2 percent from the second quarter, when it increased 0.4 percent.

Germany's industrial production in October unexpectedly dropped for the first time in three months, suggesting that manufacturing is yet to recover from a slowdown despite some improvement in demand.

Industrial production dropped 0.5 percent from September, when they grew 0.1 percent, revised from 0.2 percent, preliminary figures from the Federal Statistical Office showed on Friday. Economists had forecast a 0.3 percent increase.

The buck has climbed to around $1.2725 against the pound sterling Friday afternoon, from an early low of $1.2790.

UK house price inflation slowed more-than-expected in November to its lowest level since December 2012, figures the Lloyds Banking Group subsidiary Halifax showed on Friday. The house price index rose 0.3 percent year-on-year in the three months to November, after a 1.5 percent increase in the three months to October. Economists had expected 1 percent growth.

The greenback reached an early high of Y112.927 against the Japanese Yen Friday, but has since retreated to around Y112.725.

The average of household spending in Japan was down 0.3 percent on year in October, the Ministry of Internal Affairs and Communications said on Friday, coming in at 290,396 yen. That missed expectations for an increase of 1.1 percent following the 1.6 percent decline in September.


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

Will the dollar fall from the pedestal?

Trading 07 déc 2018 Commentaire »

How much rope does not curl, and the end is always one. After a report on US employment in November, it became clear that the US dollar rally had come to an end. If someone hoped that, thanks to strong statistics, the heyday of the economy would be extended, then a slower growth in average wages (+ 0.2% m / m) and employment outside the agricultural sector (+155 thousand), than experts Bloomberg had expected, caused a serious blow to his faith. The idea of slowing US GDP hovers again above the markets, forcing to buy EUR / USD.

The fundamental analysis is based on the principle "a strong economy - a strong currency", but you need to understand that the current values of key indicators mean little to the future dynamics of the exchange rate. The question is what is the trend. In this regard, a slowdown from 4.2% in the second to 3.5% in the third and to 2.7% q / q in the fourth, as predicted by the leading indicator from the Atlanta Fed, indicates a depletion of the fiscal stimulus effect. If Donald Trump and his team do not persuade Congress to expand the scope of tax reform, it will be possible to forget about repeating the successes of the current year. And this means that it is time for the US dollar to leave the pedestal.

Dynamics of US GDP

36WSqktEeiw1zipPuHkOdMKuPQFW3whRW7JG_GfN

On the other hand, we see the euro, which is not sparkling with success, whose purchases are unsafe. The slowdown in eurozone GDP to 0.2% q / q, the inability of core inflation to go far from the 1% mark, the political crisis in Italy and Brexit seem to be serious deterrents for the bulls in EUR / USD. At the same time, a truce in the US and Chinese trade war creates prerequisites for improving global demand, which is extremely important for the export-oriented economy of the currency bloc. Add to this the potential recovery of the German automotive industry after a serious downturn in July-September, and the picture begins to change. The ECB's belief that the eurozone will stand on its feet can be realized. If the British parliament supports Teresa May, and Rome makes concessions, the main currency pair is quite capable of realizing the median forecast of Reuters experts. More than 60 strategists believe that the end of 2019 euros will cost $ 1.2.

Thus, the "bears" in EUR / USD are cause for concern, while the "bulls" - for hope. Another thing, can the above scenario be realized? Expand Donald Trump's scale of tax reform, renew the trade war, or cause political chaos in Britain, not a single European currency. In addition, selling the dollar on the eve of the FOMC meeting, which is likely to raise rates, is dangerous. If so, the main currency pair risks continuing to consolidate until the December Fed meeting. Unless, of course, strong statistics on US inflation or the dovish rhetoric of the ECB pushes it lower.

Technically, the consolidation of EUR / USD in the trading range of 1.13-1.15 in the framework of the implementation of the Splash and Shelf pattern continues. A break of the upper boundary will increase the risks of growth of the pair in the direction of 1.169 and 1.175. On the contrary, a successful storming of support at 1.13 will open the way for the bears to the south.

EUR / USD, the daily chart

Mg28rpWFozCvFLkJ4nJ5xJcHVhl3gOZdYC4Tohq_

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

Traders bet that the Fed is slowing rate hike next year

Trading 07 déc 2018 Commentaire »

analytics5c0a91ae2bc9c.jpg

Traders said the Federal Reserve Fund would need to slow down the rate of rate hikes next year after a government report showed that employers hired fewer employees in November than expected.

Added just 155,000 jobs last month, significantly less than the expected 200,000, this further exacerbates growing doubts in financial markets that the Fed will adhere to the strategy of three rate hikes over the next year. Recall doubts about the Fed rate hike in 2019 were recently caused by a significant sell-off in the stock market and heightened fears about a slowdown in the economy and the weakening effect of tax incentives in the United States. Recent comments by Fed Chairman Jerome Powell about the need for a "slowdown" under uncertain conditions added skepticism that the Fed could continue to raise rates just as aggressively.

Currently, more and more experts are inclined to believe that next year the Fed will make only one approach no earlier than the middle of the year. The published report is not weak enough to refuse to raise rates in December, but it will definitely contribute to the revision of the Fed's policy on raising rates in 2019.

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

What is waiting for the dollar? How does negative employment data affect currency?

Trading 07 déc 2018 Commentaire »

analytics5c0a8fb12df3d.jpg

The dollar began to fail and will end the week with a fall. The alarming comments by the head of the Fed, the inversion of the yield curve of US government bonds, and now also the slowdown in the growth of employment and monthly wages. New data suggest a decline in economic activity, which may be a reason for the Fed not to rush to raising interest rates next year.

_dMS95HOD24JpTTNbZIX_7zsW6_VVL65i8yC5gb5

Although the dollar index versus the basket of major currencies declined, in general, there was no large-scale collapse, even with such tremendous pressure on the currency. Concerns about the recession and the subsequent recession are growing, and if the market gives way to panic, the situation can get out of control. Experts note that the weakest in the last 8 months the rate of employment in the non-agricultural sector may be due to earlier than usual cold weather and lack of qualified personnel. Unemployment remains unchanged, at the 49-year low of 3.7 percent. Average hourly earnings in November rose by only 6 cents, or 0.2 percent after they rose 0.1 percent in October. Wage growth was moderate, despite the fact that the Internet giant Amazon has increased the minimum wage to $ 15 per hour due to tighter labor market conditions. Companies also cut working hours. The average working week was reduced to 34.4 hours from 34.5 hours in October. The employment report may increase concerns about the health of the economy and reduce the likelihood of the Fed raising interest rates next year. The December increase, these data are likely to not affect.

CBgZv7P-Ds8E2iWTy9d5tmLNqqK4SUw9lxTUzjsx

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

OPEC + countries agreed to reduce oil production by 1.2 million barrels per day

Trading 07 déc 2018 Commentaire »

analytics5c0a858207799.jpg

Iranian Oil Minister Thamer Al-Ghadban told reporters that the Organization of Petroleum Exporting Countries (OPEC), after many hours of negotiations, agreed to further reduce world oil production by 1.2 million barrels per day during the first half of 2019. In April of the next year, the terms of the deal are revised.

According to Al-Ghadban, 800 thousand barrels per day from the total reduction will be in OPEC countries and 400 thousand barrels in countries outside the cartel. Thus, each country participating in the agreement should reduce oil production by about 3%. October 2018 was taken for the base month from which the reduction will be calculated.

At the same time, Russia agreed to reduce its production by only 150 thousand barrels per day. Iran has made exceptions for itself from the deal to restrict production, while illegal US sanctions are in effect.

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