Forex 4 minutes to read

'An ill wind blows nobody any good'

Summary:  Hurricane Michael is giving some support to oil prices as drilling platforms which account for about 35% of Gulf of Mexico production were moved or shut down. Elsewhere, EURGBP may be setting the stage for a big drop.


When English playwright John Heywood wrote “it’s an ill wind that blows nobody any good,” it was 1546 in England.  His words are prophetic for the more than 1.4 million residents of the Florida Panhandle who are at “ground zero” for Hurricane Michael, a Category 4 storm. AccuWeather predicts $30 billion in damage from the winds and flooding.  The storm is a distraction for US markets while they await Thursday’s inflation data.

The hurricane is giving some support for oil prices as drilling platforms which account for about 35% of Gulf of Mexico production were moved or shut down.  In addition, forecasters attending the Oil and Monday Conference in London predict Brent oil will trade in the $65-$100/barrel range next year. Profit taking has driven prices down from $76.05/b to $74.24/b.

US Producer Prices were somewhat stronger than expected which may have helped to upgrade Thursday’s CPI report. (forecast 2.3%, y/y). The PPI data helped Treasury yields tick higher, but the gains were not sustained. Nevertheless, Wall Street traders were spooked by fears of higher inflation. The three major indices are well into the red led by a drop of 1.77% in the Nasdaq as of 14:00 GMT.

The US dollar has been on the defensive since the open, reversing the small gains it had made overnight, although the moves are merely noise as the greenback see-saws in narrow ranges. 

However, EURGBP may be setting the stage for a big drop. EURUSD is under pressure from the Italian budget debate while somewhat optimistic Brexit chatter buoys GBPUSD.  EURGBP has been sliding steadily since the beginning of the month. The slide accelerated yesterday with the break below 0.8770 but found a bit of support at 0.8730.  A break below 0.8730 and then 0.8700 opens the door to a plunge to 0.8620.  A move above 0.8780 would negate the downward pressure for the short term.

Chart: EURGBP hourly:
Source: Saxo Bank
Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Pty Ltd.
Level 25, 2 Park Street
NSW 2000
Sydney
Australia

Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Combined Financial Services Guide & Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.