Crude Oil Futures Settle Higher

Trading 11 déc 2018 Commentaire »

After a sharp fall in the previous session, crude oil futures rebounded to close higher on Tuesday, aided by an unexpected supply cut from Libya.

News about Libya's National Oil Company declaring force majeure on exports from the El Sharara oilfield lifted crude oil prices today, although worries about a likely fall in crude demand due to weak outlook for global economic growth, and doubts over how OPEC and its allies plan to implement planned production cuts next year limited the commodity's upside.

The move to stop exports from the El Sharara oilfield, which was seized by a local militia group last weekend, is expected to result in a production loss of 315,000 barrels a day and an additional loss of 73,000 barrels a day at the El Feel oilfield.

Crude oil futures for January ended up $0.65, or 1.3%, at $51.65 a barrel on the New York Mercantile Exchange.

On Monday, crude oil futures ended down $1.61, or 3.1%, at $51.00 a barrel, the lowest settlement price in about a week.

Traders also weighed Chinese customs data released over the weekend. The data showed China's crude oil imports rose 15.7% year-on-year to a record high of 10.48 million barrels a day in November, beating previous record of 9.64 million barrels a day reached in April 2018.

The Energy Information Administration (EIA) has reduced its oil-price forecasts for this year and next, following the recent price declines that came ahead of Friday's decision by the Organization of the Petroleum Exporting Countries and some non-member allies to cut production starting in January.

EIA is scheduled to come out with its inventory data on Wednesday morning. After ten successive week of increases, U.S. crude stockpiles declined in the week ended November 30. Last week's data from EIA showed, crude oil inventories in the U.S. were down by 7.3 million barrels to 443.2 million barrels.

The American Petroleum Institute's weekly oil report is due later today.


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Treasuries Close Modestly Lower Following Choppy Trading Session

Trading 11 déc 2018 Commentaire »

Treasuries fluctuated over the course of the trading session on Tuesday before ending the day modestly lower.

After seeing initial weakness, bond prices climbed back near the unchanged but pulled back in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to 2.879 percent.

With the modest increase on the day, the ten-year yield climbed further off the more than three-month closing low set last Friday.

The afternoon pullback by treasuries came after the Treasury Department released the results of its auction of $38 billion worth of three-year notes, which attracted below average demand.

The three-year note auction drew a high yield of 2.748 percent and a bid-to-cover ratio of 2.59, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.73.

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

Renewed optimism about U.S.-China trade talks also reduced the appeal of treasuries after a telephone call between top officials from the world's two largest economies.

China's Commerce Ministry said Chinese Vice Premier Liu He spoke with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer.

"Both sides exchanged views on putting into effect the consensus reached by the two countries' leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work," the ministry said in a statement.

Indications the talks are moving forward has offset some of the skepticism about the potential for a trade deal after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day trade truce earlier this month.

A report from Bloomberg News that China is moving toward cutting tariffs on imported U.S.-made cars added to the optimism.

Citing people familiar with the matter, Bloomberg said a proposal to reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent has been submitted to China's Cabinet.

Just after his meeting with Xi, Trump claimed in a post on Twitter that China had agreed to reduce and remove tariffs on cars coming into China from the U.S.

Meanwhile, traders largely shrugged off a report from the Labor Department unexpectedly showing a modest uptick in producer prices in the month of November.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.6 percent in October. Economists had expected prices to be unchanged.

Excluding food and energy prices, core producer prices rose by 0.3 percent in November following a 0.5 percent increase in October. Core prices had been expected to edge up by 0.1 percent.

On Wednesday, the Labor Department is scheduled to release a separate report on consumer prices in the month of November.

Consumer prices are expected to come in unchanged during the month, while core consumer prices are expected to rise by 0.2 percent.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $24 billion worth of ten-year notes.


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Gold Settles Lower Again As Dollar Edges Up

Trading 11 déc 2018 Commentaire »

Gold futures settled lower on Tuesday, failing to hold early gains, as the dollar recovered from earlier weakness for a second successive day.

The prospects of a rate hike next week pulled the dollar out of the red. However, it is widely expected that the Fed will pause monetary tightening sometime soon in the coming year.

The dollar index wiped off earlier losses and moved up by about 0.2%.

Gold futures for February ended down $2.20, or 0.2%, at $1,247.20 an ounce.

On Monday, gold futures ended down $3.20, or 0.3%, at $1,249.40 an ounce.

Silver futures for March settled at $14.628 an ounce, up $0.023 from Monday's close.

Copper futures for March ended up $0.047, at $2.767 per pound.

On the Brexit front, the U.K. Prime Minister Theresa May, after calling off a crunch House of Commons vote, is now set to meet European leaders and European Union officials in the hope of clinching a better Brexit deal.

With regard to U.S.-China trade disputes, the two countries have resumed trade talks. According to reports, China's Vice Premier Liu He met US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Tuesday, to discuss next steps to implement the agreement reached at the G20 summit.

China's Commerce Ministry said, "Both sides exchanged views on putting into effect the consensus reached by the two countries' leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work."

According to Bloomberg News, a proposal to reduce tariffs on cars made in the U.S. to 15% from the current 40% has been submitted to China's Cabinet.

Meanwhile, concerns about Italy's budget dispute with Brussels continue to linger as the government is yet to reach a consensus on the budget.

In U.S. economic news, a report from the Labor Department said its producer price index for final demand inched up by 0.1% in November after climbing by 0.6% in October. Economists had expected prices to be unchanged.

Excluding food and energy prices, core producer prices rose by 0.3% in November following a 0.5% increase in October. Core prices had been expected to edge up by 0.1%.


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Dollar Recovers From Early Weakness

Trading 11 déc 2018 Commentaire »

The dollar got off to a weak start Tuesday, but has since stage a recovery and is now up slightly against its major rivals. The buck weakened in early trade as traders turned optimistic on the trade negotiations between the U.S. and China.

China's Commerce Ministry said Chinese Vice Premier Liu He spoke with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer.

"Both sides exchanged views on putting into effect the consensus reached by the two countries' leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work," the ministry said in a statement.

Producer prices in the U.S. unexpectedly showed a modest uptick in the month of November, according to a report released by the Labor Department on Tuesday. The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.6 percent in October. Economists had expected prices to be unchanged.

The dollar dropped to an early low of $1.14 against the Euro Tuesday, but has since rebounded to around $1.1315.

German investor confidence rose strongly in December, defying expectations for a modest weakening, but caution prevailed as financial analysts' assessment of the current economic situation again deteriorated sharply due to sluggish economic growth and uncertainties linked to global trade and Brexit.

The ZEW Indicator of Economic Sentiment for Germany rose 6.6 points to reach minus 17.5 points in December, results of a survey by the Centre for European Economic Research, or ZEW, showed on Tuesday.

Economists had forecast the index, which reflects analysts' economic expectations for the next 6 months, to worsen further to minus 25.

The buck fell to an early low of $1.2638 against the pound sterling Tuesday, but has since bounced back to around $1.2525.

UK wages rose at the fastest pace in a decade in the three months to October, suggesting that real pay growth is turning sustainable and contribute to economic growth if a "no-deal" Brexit is avoided.

Average wages including bonuses rose 3.3 percent year-on-year, which was the biggest increase since the May to July period of 2008, the Office for National Statistics said on Tuesday. Economists had forecast a 3 percent increase.

The greenback has risen to around Y113.350 against the Japanese Yen Tuesday afternoon, from a low of Y113.008 this morning.

The M2 money stock in Japan was up 2.3 percent on year in November, the Bank of Japan said on Tuesday, standing at 1,010.5 trillion yen. That was shy of expectations for an increase of 2.6 percent and down from 2.7 percent in October.


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Three-Year Note Auction Attracts Below Average Demand

Trading 11 déc 2018 Commentaire »

Kicking off this week's series of long-term securities auctions, the Treasury Department sold $38 billion worth of three-year notes on Tuesday, attracting below average demand.

The three-year note auction drew a high yield of 2.748 percent and a bid-to-cover ratio of 2.59.

Last month, the Treasury sold $37 billion worth of three-year notes, drawing a high yield of 2.983 percent and a bid-to-cover ratio of 2.54.

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 2.73.

Looking ahead, the Treasury is due to sell $24 billion worth of ten-year notes on Wednesday and $16 billion worth of thirty-year bonds on Thursday.


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BITCOIN Analysis for December 11, 2018

Trading 11 déc 2018 Commentaire »

Bitcoin has been quite steady under persistent bearish pressure after bouncing off the $3,500-600 area with a daily close. The price has been non-volatile and impulsive with the bearish momentum which is expected to lead the price towards $3,000 area but certain correction and pullbacks may be observed along the way. The dynamic levels like 20 EMA, Tenkan and Kijun line is currently holding the price above as resistance while residing below the Kumo Cloud resistance as well. Moreover, MACD is currently getting skewed higher indicating certain bullish correction may occur before the price moves much lower in the coming days. As the price remains below $4,000 area with a daily close, the impulsive bearish pressure is expected to continue.

SUPPORT: 2,850, 3,000

RESISTANCE: 3,500, 3,600

BIAS: BEARISH

MOMENTUM: NON-VOLATILE

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India Appoints Former Bureaucrat Shaktikanta Das As Central Bank Chief

Trading 11 déc 2018 Commentaire »

India's government named veteran bureaucrat Shaktikanta Das as the new governor of the Reserve Bank of India, following the abrupt resignation of Urjit Patel on Monday.

Das, a former economic affairs secretary, has been appointed for a period of three years, the government said in a statement.

A retired officer of the Indian Administrative Service, Das will be the 25th governor of the RBI.

Patel unexpectedly resigned on Monday citing personal reasons, though markets and economists were speculating such a move after the rift between the central bank and the government became public.

The two were at loggerheads over important issues such as central bank independence, the use of central bank reserves, bad loans, and rules on lending to small and medium businesses.

Patel quit ahead of the expiry of his term in September 2019.

Financial markets and the Indian rupee reacted sharply to the RBI governor's resignation on Tuesday.

Several economists commented that Das's appointment is positive for the Indian market as the government was able to quickly clear the uncertainty linked to the central bank.

Patel's resignation came at a worse time for Prime Minister Narendra Modi. Results of the local elections in some key states suggested that his party, the BJP, faced defeat some heartland states such as Rajastan and Chhattisgarh.

The main opposition, the Congress, attributed part of their victory to voters' displeasure with the some of the Modi government's economic decisions, mainly demonetization.

Das, who has held key positions in the finance ministry under the current government and the previous one, is a member of the Fifteenth Finance Commission and India's Sherpa to the G20.

The Narendra Modi government's drastic move of demonetization, which meant abrupt cancellation of more than 80 percent of currency in circulation, was announced when Das was the economic affairs secretary.

He was often seen defending the government's decision then, while opposition politicians and several economists called the measure "draconian".

Demonetization led to a severe shortage of cash in the months following its announcement on November 8, 2016 and people with low income and those with jobs in the unorganized sector was largely hit. Small businesses also were affected with several closing down.

A year since demonetization, Das announced on Twitter that the measure reaped "significant gains for the economy".

The government also implemented the Goods and Services tax when Das was the economic affairs secretary. The manner in which the measure was implemented came in for a good amount of criticism.

Das is a postgraduate in history from the University of Delhi and studied at the St. Stephen's College, one of India's most prestigious educational institutions.


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Romania Inflation Slows For Third Month

Trading 11 déc 2018 Commentaire »

Romania's consumer price inflation eased for a third straight month in November, hitting the lowest level thus far this year, data from the National Institute of Statistics showed on Tuesday.

Inflation fell to 3.4 percent in November from 4.3 percent in October. Economists had forecast inflation of 3.8 percent.

The CPI decreased 0.13 percent from the previous month.

Both food and non-food prices declined over 0.1 percent each from the previous month.

Services registered the biggest price growth of 0.1 percent in November.


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U.S. Producer Prices Unexpectedly Show Modest Uptick In November

Trading 11 déc 2018 Commentaire »

Producer prices in the U.S. unexpectedly showed a modest uptick in the month of November, according to a report released by the Labor Department on Tuesday.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.6 percent in October. Economists had expected prices to be unchanged.

Prices for food showed another significant increase, surging up by 1.3 percent in November after jumping by 1.0 percent in October.

On the other hand, the report said energy prices plunged by 5.0 percent in November following a 2.7 percent spike in the previous month. Gasoline prices plummeted by 14.0 percent.

Excluding food and energy prices, core producer prices rose by 0.3 percent in November after rising by 0.5 percent in October. Core prices had been expected to edge up by 0.1 percent.

The bigger than expected increase in core producer prices came as prices for final demand services climbed by 0.3 percent in November after soaring by 1.6 percent in October.

A 1.2 percent jump in prices for transportation and warehousing services led the way higher, while prices for trade service rose by 0.3 percent and prices for other services inched up by 0.1 percent.

Despite the modest monthly increase, the report said the annual rate of producer price growth slowed considerably to an eleven-month low of 2.5 percent in November from 2.9 percent in October.

On the other hand, the annual rate of core producer price growth accelerated to 2.7 percent in November from 2.6 percent in October.

"The subdued 0.1% m/m rise in producer prices in November was mostly due to the sharp drop back in gasoline prices, but the rise in underlying services prices was more subdued too," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "With pipeline inflationary pressures moderating, we think there is little risk of core consumer price inflation rising further over the coming year or so."

The Labor Department is scheduled to release a separate report on consumer prices in the month of November on Wednesday.

Consumer prices are expected to come in unchanged during the month, while core consumer prices are expected to rise by 0.2 percent.


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U.S. Dollar Falls Amid Risk Appetite On Trade Talk Hopes

Trading 11 déc 2018 Commentaire »

The U.S. dollar dropped against its most major counterparts in the European session on Tuesday, as investors cheered progress in trade talks between Washington and Beijing following news that China's Vice Premier Liu He held telephonic conversation with Treasury Secretary Steven Mnuchin to resolve the dispute.

The conversation was focused on Chinese purchases of agricultural products and changes to fundamental Chinese economic policies.

"Both sides exchanged views on putting into effect the consensus reached by the two countries' leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work," China's commerce ministry said in a statement.

Data from the Labor Department showed that U.S. producer prices unexpectedly showed a modest uptick in the month of November.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.6 percent in October. Economists had expected prices to be unchanged.

The currency has been trading lower against its major counterparts in the Asian session.

The greenback edged down to 1.1400 against the euro, from an early 5-day high of 1.1350. The greenback is poised to find support around the 1.15 mark.

Data from the Centre for European Economic Research showed that German investor confidence rose strongly in December, defying expectations for a modest weakening.

The ZEW Indicator of Economic Sentiment for Germany rose 6.6 points to reach minus 17.5 points in December.

The greenback reversed from an early high of 1.2550 against the pound and fell to 1.2638. On the downside, 1.28 is seen as the next likely support level for the greenback.

The greenback dropped to 0.9863 against the franc, its lowest since October 16. The greenback is seen finding support around the 0.97 mark.

The greenback fell to 0.6904 against the kiwi, 0.7224 against the aussie and 1.3378 against the loonie, from its early highs of 0.6862 and 0.7185, a 5-day high of 1.3422,respectively. The next possible support for the greenback is seen around 0.70 against the kiwi, 0.74 against the aussie and 1.32 against the loonie.

On the flip side, the greenback bounced off to 113.26 against the yen, from an early low of 113.01. If the greenback rises further, it may find resistance around the 115.00 region.

Data from the Bank of Japan showed that Japan M2 money stock rose 2.3 percent on year in November, standing at 1,010.5 trillion yen.

That was shy of expectations for an increase of 2.6 percent and down from 2.7 percent in October.


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