'An ill wind blows nobody any good'
FX Trader, Loonieviews.net
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.
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:
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