It’s another busy day for US crude, which has posted sharp losses in the Tuesday session. In North American trade, WTI/USD futures are trading at $45.28. Brent crude futures are trading at $46.50, as the Brent premium stands at $1.22. On the release front, US data was very sharp. Preliminary GDP sparkled in the third quarter, gaining 3.2%, which was above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. CB Consumer Confidence jumped to 107.1 points, crushing the estimate of 101.7 points. On Wednesday, US, key employment indicators kick off with the release of ADP Nonfarm Employment Change. The markets are expecting a strong improvement, with an estimate of 161 thousand.
OPEC members will meet in Vienna on Wednesday, hoping to reach an agreement to cap production in order to boost oil prices. OPEC wants to include non-OPEC countries as well, and Russia has come out in favor of a freeze. Iran and other members have stated that they will not agree to lower their production, a demand which could torpedo any chance of an agreement. US crude is down 4.5 % on Tuesday, as the markets are clearly feeling uneasy about the likelihood of an agreement. Given the uncertainty as to whether an agreement will be reached, we could see continue to see volatility from oil prices this week.
Strong consumer confidence has been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.
The markets are virtually certain that the Fed will raise interest rates a quarter-point in December, with the odds of a rate hike at 93 percent. The Fed minutes were released on Thursday, indicating that policymakers felt it appropriate to raise rates “relatively soon”. Earlier this month, Fed Chair Janet Yellen used the same phrase in her testimony before a congressional committee. The minutes indicated that some members argued that the Fed needs to raise rates in December in order to preserve the bank’s credibility – despite some broad hints of rate hikes during 2016, the Fed has stayed on the sidelines throughout 2016, causing significant disappointment and frustration in the markets.
Tuesday (November 29)
- 8:15 US FOMC Member William Dudley Speech
- 8:30 US Preliminary GDP. Estimate 3.0%. Actual 3.2%
- 8:30 US Preliminary GDP Price Index. Estimate 1.5%. Actual 1.4%
- 9:00 US S&P/CS Composite-20 HPI. Estimate 5.3%. Actual 5.1%
- 10:00 US CB Consumer Confidence. Estimate 101.3 points. Actual 107.1
- 12:40 US FOMC Member Jerome Powell Speech
Wednesday (November 30)
- 8:15 US ADP Nonfarm Employment Change. Estimate 161K
- 10:30 US Crude Oil Inventories
*All release times are EST
*Key events are in bold
WTI/USD for Tuesday, November 29, 2016
WTI/USD November 29 at 11:50 EST
Open: 46.92 High: 46.96 Low: 44.84 Close: 44.93
WTI USD Technical
- WTI/USD was flat in the Asian session and posted sharp losses in European trade. The pair is flat in the North American session
- 40.57 is providing support
- 46.54 has switched to resistance following sharp losses by WTI/USD
Further levels in both directions:
- Below: 40.57, 33.22 and 26.06
- Above: 46.54, 52.22, 58.32 and 65.05
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