Oil Gains on Hopes of OPEC Output Deal Next Week

It’s been a mixed start to trading on Monday, with some of the main market drivers in recent weeks appearing to fizzle out as traders look to lock in some profits on what is likely to be one of the quieter weeks.

The dollar’s recent surge, triggered by Donald Trump’s election victory and rising rate hike expectations that followed, appears to have cooled off a little. Markets are now pricing in a 95% chance of a rate hike next month so it’s logical that were seeing some cashing in. While this may prompt some dollar weakness in the short term, I still think rate expectations beyond December are too cautious so the greenback is likely to remain well supported.

FedWatch

Source – CME Group FedWatch Tool

USD/JPY – Dollar Flirts With 111 as Yen Under Pressure

Commodities appear to be benefiting as the dollar comes off its highs, particularly oil which has the added boost of slightly higher hopes that OPEC can reach an agreement on the details of an output cut next week. The initial deal had been thrown into doubt by the unwillingness of certain members to take part in the cut but it would appear people close to the talks remain confident. Vladimir Putin appears to be one of those that has high hopes of a deal being done which would pave the way for Russia to take similar steps. A firm deal next week could see oil spike higher as it’s currently well below the levels it reached in the weeks after the initial deal was agreed in Algiers.

Brent Daily

OANDA fxTrade Advanced Charting Platform

The fact that it’s Thanksgiving week and we have few notable economic events should mean it’s likely to be one of the quieter weeks in the markets. That said Wednesday could be quite eventful, with the November FOMC minutes being released, the UK’s first post-Brexit plans from the new Chancellor being announced and a host of PMI numbers due out. Today we’ll hear from ECB President Mario Draghi who may be pushed on what we should expect following next month’s meeting, with the accounts from the last indicating that an update on the QE program will agreed.

Trump Jump To High?

Economic Calendar

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

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.