Oil and Fed’s Fischer in Focus

US futures are pointing to a slightly higher open on Wall Street on Tuesday, with investors slightly buoyed by the outcome of the Presidential debate.

The election in November is one of the biggest risk events facing the markets this year and the way markets responded to the first debate makes it clear which outcome is more favourable. Clinton appeared to edge the first debate which has provided a lift for investors, albeit only a slight one as the polls remain extremely close and the campaign has a long way to go.

The Mexican Peso is particularly sensitive to the election and will likely remain very volatile over the next month or so. It’s currently up around 1.5% having pared earlier gains, but remains down almost 10% against the dollar since the middle of August as the odds of a Trump Presidency have risen.

USD/CAD – Slumping Canadian Dollar Slips to 6-Month Lows, US Consumer Confidence Next

Oil markets remain volatile today as traders await the outcome of informal talks in Algeria between OPEC members and some others including Russia regarding output and prices. As we’ve seen so often in the past, the possibility of a deal has been talked up a lot in the weeks leading up to tomorrow’s meeting and now it seems the opposite is happening. Saudi Arabia’s Energy Minister Khalid al-Falih described tomorrow’s event as a consultative meeting earlier today, which doesn’t strike me as the kind of language that precedes a deal. Markets appear to be perceiving it in the same way.

In the absence of a deal, we’ll need to get some concrete signal that one is likely in the coming months if we want to see oil testing the highs of the last month any time soon. All this talk is starting to wear a little thin and while these countries do appear a lot closer than they have in the past, they are coming from a very low base and still appear far from an actual agreement.

The API weekly crude oil stocks figure will be of interest to oil traders again today, with inventories having fallen for two out of the last three weeks, or all three if the EIA data is to be believed. Another drop could offer some support to oil prices which are currently down just over 1% on the day.

Mexican Peso rallies 2% as debate rages

As far as today is concerned, focus will be back on the US with some economic data being released and Fed Vice Chair Stanley Fischer scheduled to speak. Fischer has recently been among those talking up the performance of the economy and the possibility of a rate hike but was not one of the three dissenters at the meeting this month. It will be interesting to see whether he’s still confident in his previous assessment of the economy, given some of the more disappointing releases as of late, and whether he sees a rate hike as being appropriate this year.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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.