Summary: Black Friday is boosting US equities today, but trade war fears, oversupply, and the ever-present worry of global demand slippage have led to a fire sale on crude oil.
Today saw WTI drop to $50.63/barrel from a pre-New York opening level of $53.60/barrel. This came on thin markets, the China/US trade war and concerns that supply from rising US production and slowing global growth will outpace demand next year.
USDCAD took centre stage in New York due to the release of September Retail Sales and October Inflation reports. Inflation was a touch warmer than expected but the Retail Sales report was tepid. After the initial churn, prices returned to their opening level. USDCAD is trading with a positive bias in an upward channel, supported by ongoing oil price weakness.
EURUSD is consolidating earlier losses from weaker than expected PMI data while GBPUSD is under pressure over UK politics. USDJPY slipped alongside a drop in US Treasury yields.
Wall Street opened in the red. Traders are reportedly spooked by the 2.21% drop in the Shanghai CSI 300 index and concerns ahead of next week’s Trump/Xi meeting. Free-falling oil prices are adding to the negative sentiment.
The week ahead looks promising for volatile trading. The EU Council debates the Brexit agreement draft and may generate some inflammatory headlines, and it should keep GBPUSD and EURUSD on high alert. Spanish officials are said to be less than enamoured with the draft and want a written promise of a veto over any future relations between the EU and Gibraltar.
The EU is embroiled in a budget dispute with Italy. Italy refuses to reduce the budget deficit of 2.4% of GDP, and the EU is threatening financial penalties. President Trump will hijack another G-20 summit meeting. The Argentina get-together in Argentina will be overshadowed by the Trump/Jinping meeting as the US and China work to resolve their trade issues.
Traders will have a lot of quality economic data to digest as well. US Q3 GDP data are released Wednesday, the Federal Open Market Committee minutes are released Thursday, and Eurozone CPI is due Friday.