Summary:
- US dollar leads the gains within the G10 basket
- European stock markets have wiped off their initial rises while Wall Street indicates a flat open
- Oil prices slightly higher in anticipation of two notable reports
Tuesday’s session hasn’t abounded in many significant macroeconomic releases so far, however despite it the US dollar is the strongest currency in the G10 basket gaining the most against the Norwegian krone (0.6%). Notice that the latter might be handing back some of its gains it made on Monday following a wild rally seen in oil prices. Besides the Australian dollar is the second worst performer within the G10 space partially owing to dropping iron ore prices (-1.1%) which nonetheless surged yesterday. In addition, the Reserve Bank of Australia stood pat earlier today suggesting no imminent changes in rates in the foreseeable future. The better performance of the US dollar coincides with a mild increase (1bps) seen in the US 10Y yield while the German bund stays flat.
The beginning of trading across the major European stock markets on Tuesday has been successful which in turn has been sparked by fresh records made on Wall Street yesterday. However since then all indices have taken a step back and now they’re trading subtly below the breakeven line. On the other hand, taking a look at the US futures one may notice that it’s going to be a flat opening irrespective of substantial increases across Asian markets.
On the commodity spectrum oil prices are treading water after a stunning rally on Monday. Take into account that crude has already climbed its highest levels for more than two years in response to multiple factors. Firstly, market participants hope that the OPEC will decide to extend its output cuts deal by several months into 2018 (possibly a 9-month extension seems to be the consensus right now) which could help take down undue stocks from the market and make the Cartel closer to its target (a 5-year moving average of crude stocks in OECD countries). Having said that, in parallel with rising crude prices the likelihood of a pullback ticks higher as well. In this analysis we outline some factors which could bring the price down in the upcoming weeks.
Bitcoin has slowed down its rally since the beginning of this week after trying to achieve a round $8000. Even as the price has drawn a potential bearish candlestick of late, Goldman Sachs sees further space to gain. As a result the US bank made an update of a technical view of Bitcoin forecasting that it might be poised to breach $8000 before long. The analysis was based on the Elliot wave theory, the chart below depicts a Goldman’s point of view on this topic.
This week is relatively calm in terms of macroeconomic releases, however such weeks often tend to be yet more tumultuous, hence it’s worth keeping a close eye. It seems that central bank speeches could draw the most attention along with the weekly report on a change in US oil stocks delivered by API.