WTI/USD – Crude Dips as CB Consumer Confidence Jumps Above 100

US crude has posted losses on Tuesday. In the North American session, WTI/USD futures are trading at $46.83 per barrel. Brent crude futures are trading at $48.73, as the Brent crude premium has narrowed to $1.90 In economic news, CB Consumer Confidence jumped to 101.4 points, easily beating the forecast. On Wednesday, we’ll get a look at US Crude Inventories. As well, the US will release two key events – ADP Nonfarm Employment Change and Pending Home Sales.

The US consumer remains optimistic about the US economy, according to a key consumer confidence survey. CB Consumer confidence jumped to 1o1.1 points in August, above the forecast of 99.7 points. It marked the indicator’s highest level since September 2015. Recent consumer sentiment indicators have been steady, and if the optimism extends to actual consumer spending, we could see the odds of a rate hike in September or December, which have dramatically increased in the past week, continue to move upwards.

US Crude showed some gains on Friday after Janet Yellen’s speech at Jackson Hole, but then retracted and ended the Friday session unchanged. The Fed chair’s message to the markets was clearly upbeat, as she said that the case for a rate increase had “strengthened in recent months”. Yellen noted that the economy was close to maximum employment, inflation was steady, and consumer spending remained solid. At the same time, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. On Friday, Fed members Dennis Lockhart and Stanley Fischer both came out in favor of two rate hikes in 2016, and these comments helped the dollar record gains against other currencies on Friday. The Fed’s stance has raised the odds of a rate move according to the CME Group FedWatch tool, with a September hike priced at 30% in September and 57% for a December hike. However, given that any move by the Fed will be data-dependent, US numbers ahead of the Fed policy meeting on September 21 could significantly change the rate outlook.

WTI/USD Fundamentals

Tuesday (August 30)

• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.1%. Actual 5.1% 
• 10:00 US CB Consumer Confidence. Estimate 97.2. Actual 101.1

Wednesday (August 31)

• 8:15 US ADP Non-Farm Employment Change. Estimate 173K
• 10:00 US Pending Home Sales. Estimate 0.7%

*Key events are in bold

*All release times are EDT

WTI/USD for Tuesday, August 30, 2016

WTI/USD August 30 at 10:35 EDT

Open: 47.06 High: 47.47 Low: 46.75 Close: 46.83

WTI USD Technical

• WTI/USD has shown limited movement in the Asian and European sessions. The pair has posted considerable losses in North American trade
• 46.69 remains a weak support line. It could break in the North American session
• There is resistance at 50.13

Further levels in both directions:

• Below: 46.69, 43.45 and 39.32
• Above: 50.13, 53.50 and 56.50

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