Loonie, Oil and Stocks Extend Declines

Oil prices took a left hook to the chin after the EIA report showed stockpiles posted their largest gain since May.  The crude oil inventory report showed refiners slowed output, the first time since mid-August but the build was driven as demand eased.  US crude exports apparently are not getting a boost from the Saudi oil field attacks. Crude prices could get ugly if WTI can’t hold the $52.50 a barrel level.  The overall health of the US economy could be described as anemic at best.  The recent softer than expected ISM, ADP and construction spending data is raising recession concerns and we could see the demand outlook for crude to continue to fall.

The overall report did have some bullish highlights, total crude and products inventories fell by 851,000 barrels.  Crude prices never benefitted from a spike in demand and unless we see a relief rally from a positive development in the trade war, we could see bearish momentum accelerate.

CAD

The Canadian dollar mirrored the move with oil prices an fell to session lows against the greenback.  The 1.3300 level is proving to be strong resistance for USD/CAD.  If  bullish momentum accelerates, 1.3450 could be the next major upside target.

Bernie

US equities fell to the session lows after reports that Vermont Senator Bernie Sanders had an artery blockage.  Sanders had two stents that were successfully inserted and the 78-year old cancel all his events until further notice.  Wall Street has been becoming increasing nervous that Senator Warren is anti-business and would look to break up a lot of the big tech stocks.  If Sanders steps down in the pursuit of the Democratic nomination, Warren could easily gain most of his progressive supporters.

Gold

Risk aversion continues to help drive gold prices higher. Gold extended its gains above $1,500 an ounce on mounting concerns the US economy is weakening. Gold benefited from the ADP private payroll data that highlighted the labor market is softening, the EIA report showed demand for crude is not strong and Wall Street is scared of an Elizabeth Warren Presidency. The US equity selloff is being led lower by Tech, Materials, Industrials and Consumer Discretionary.

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.

Ed Moya

Ed Moya

Senior Market Analyst - The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya