Summary: As the excitement generated by the Fed chair's monetary policy comments fades, FX is in a bit of a funk while traders await the the crunch meeting between the presidents of China and the US at the weekend. Oil, on the other had, has ripped higher.
Wall Street is consolidating yesterdays large gains. Prices are modestly in the red because traders appear to be unwilling to get too involved ahead of month end and this weekend’s President Trump and President Xi Jinping meeting in Argentina. Trump seems to believe that the prospect of an increase in tariffs on Chinese imports that take effect January 1 and the threat of a new round of tariffs will bend China to America’s will. Financial markets are sceptical which explains this morning’s cautious price action.
FX markets are in “wait and see” mode. The G-10 majors are trading close to where they opened, although the US economic reports have been mixed to weaker. Pending Home Sales fell 2.6% in October, the lowest since June 2014. (forecast 0.5%) and Jobless claims rose 234,000 last week (forecast 220,000) However, US Personal Income in October, at 0.5% was a tick higher than expected.
Oil prices soared. WTI rose as much as 3.0% from where it opened in New York on a report that Russia supported Saudi Arabia’s call for new production cuts to help shore up prices. Prices retreated to $51.10/barrel because the Opec meeting is still a week away and a lot of things could change.
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