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Huge API Drawdown Boosts Oil
Posted On 28 Aug 2019
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USD Higher
The US dollar has been higher again over the European session so far today, with the index extending yesterday’s gains to trade 98.04 last. USD has been boosted by weaker equities over the last 24 hours as pessimism around US/China trade talks has weighed on risk sentiment. A light data sheet today should keep flows fairly subdued across the rest of the day.
EUR Holding Up
EURUSD has been a little firmer today, despite a higher USD. However, the near-term outlook for EUR remains negative with the ECB widely expected to announce large easing measures at the upcoming September meeting. Weak German data this week has added to these expectations with EURUSD remaining below the 1.1112 level for now.
GBP Down on Parliamentary Suspension News
GBPUSD has come under heavy selling pressure today in reaction to the news that the UK government is seeking a parliamentary suspension. The move is part of Johnson’s strategy to ensure a no-deal Brexit on October 31st and is heightening fears that such an outcome will indeed happen. GBPUSD trades 1.2197 last.
Equities Pause
Risk assets have had a subdued session so far with SPX500 hovering around unchanged levels on the day following losses suffered yesterday. The index trades 2872.73 last, still sitting well above the 2825.30 level for now, despite fears that US/China trade talks will lead to no solution. Trump’s unpredictable reactions over recent days have cast doubt on the prospect of a deal being done.
Gold Higher
Safe havens have had a mixed session so far over the European morning on Wednesday with gold higher against USD while JPY has come off a little. USDJPY trades 105.78 last with price action having stagnated heavily over recent sessions. XAUUSD trades 1542.37 last with price remaining above the 1522.75 for now, keeping focus on a further grind to the upside.
Crude Rallies on API Drawdown
Oil prices have seen a strong move to the topside over the last 24 hours as the market digests the latest API report. The institute reported a mammoth 11.1 million barrel drawdown in inventory levels last week. Traders now wait for the headline EIA report later today to confirm the reading, which should keep crude underpinned in the near term. Crude trades 55.59 last.
High Betas Held Down
USDCAD has had a quiet session so far with price hovering around the 1.33 level for now. Disappointingly for CAD bulls, the upside moves in crude have failed to lift CAD. The currency has come back under pressure amidst concerns over the health of US/China trade negotiations.
AUDUSD has been in the red over the European session so far today also. Pessimism around the US/China trade story, as well as RBA easing expectations, are keeping AUD weighed currently. Price is now sitting back below the .6758 level.
