Oil Weighs as Five Week Winning Streak Nears End

European indices are expected to open around half a percentage point lower on Thursday, following in the footsteps of their U.S. and Asian counterparts which came under pressure on the back of oil’s sell-off late Wednesday.

It’s been a relatively slow week in the markets so far, with trading volumes being naturally hit in the run up to the long bank holiday weekend. Oil has been one of the few catalysts for the markets this week, which have been broadly stable barring the brief dash for safety following the tragic events in Brussels on Tuesday.

Apart from that it’s been a relatively light week on the data front, which has offered little direction for traders. Yesterday’s surprisingly large build in crude inventories – 9.4 million against expectations of 2.5 million – sparked them back to life a little, putting Brent and WTI crude under pressure and setting them on course for their first weekly losses in six.

We could see some more volatility in the markets today – albeit likely against a backdrop of lower volumes again – with retail sales data from the U.K. and durable goods orders from the U.S. being released. These are both extremely important economic indicators and offer great insight into the health of the respective economies.

The services sector currently makes up more than three quarters of the U.K. economy, of which retail sales is a significant component. Put simply, if consumers stop spending or, at least, take their feet off the gas at all, the economy would suffer considerably which could have significant knock on effects, both from a political and monetary perspective. Fortunately, despite wage growth still being underwhelming, consumers are continuing to splash the cash, although this is expected to slow a little this month, with core sales rising 3.4% compared to last year, down from 5% in January.

Economic Calendar

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.