IronFX Daily Commentary by Sakis Paraskevov | 22/12/2015
December 22, 2015 10:16 am
The oil glut continues • Oil currencies continue taking a hit as oil prices decline further. Brent crude oil sank to its lowest level since 2004, while WTI stands just above its 2009 lows. • On the supply side, with the US and Russia expanding their production, as well as Iranian oil ready to enter the market when sanctions are lifted in 2016, there are few signs that the downward trend will change. • Meanwhile, the economic slowdown in EM and particularly in China, has kept the global demand subdued. • In a relatively thin market, we could see the effects of oil prices continue to weigh on oil currencies, especially if the downtrend continues. • On the upside, the low oil prices could increase the disposable income, which policymakers hope may translate to upward pressure on inflation. • Today: • US: The final GDP estimate for Q3 is expected to show that the US economy grew somewhat slower than initially thought, and the possible slowdown could hurt the improving outlook of the economy. Just one day ahead of the personal spending figures, traders will be monitoring the consumer spending component of Q3 GDP for indications of any surge in demand. The final core PCE deflator estimate, the Fed’s favourite inflation measure, is forecast to confirm the 2nd estimate. A possible surprise in the figure could affect the pace of future rate hikes. Existing home sales for November are expected to have increased marginally. Net-net, strong data are needed for USD to gain momentum again. • Germany: The Gfk consumer confidence for January, is expected to remain unchanged. • Sweden: Retail sales for November are expected to have accelerated from the previous month. The rise in retail sales could put upward pressure on prices and could support SEK, at least temporarily.
The oil glut continues
• Oil currencies continue taking a hit as oil prices decline further. Brent crude oil sank to its lowest level since 2004, while WTI stands just above its 2009 lows.
• On the supply side, with the US and Russia expanding their production, as well as Iranian oil ready to enter the market when sanctions are lifted in 2016, there are few signs that the downward trend will change.
• Meanwhile, the economic slowdown in EM and particularly in China, has kept the global demand subdued.
• In a relatively thin market, we could see the effects of oil prices continue to weigh on oil currencies, especially if the downtrend continues.
• On the upside, the low oil prices could increase the disposable income, which policymakers hope may translate to upward pressure on inflation.
• Today:
• US: The final GDP estimate for Q3 is expected to show that the US economy grew somewhat slower than initially thought, and the possible slowdown could hurt the improving outlook of the economy. Just one day ahead of the personal spending figures, traders will be monitoring the consumer spending component of Q3 GDP for indications of any surge in demand. The final core PCE deflator estimate, the Fed’s favourite inflation measure, is forecast to confirm the 2nd estimate. A possible surprise in the figure could affect the pace of future rate hikes. Existing home sales for November are expected to have increased marginally. Net-net, strong data are needed for USD to gain momentum again.
• Germany: The Gfk consumer confidence for January, is expected to remain unchanged.
• Sweden: Retail sales for November are expected to have accelerated from the previous month. The rise in retail sales could put upward pressure on prices and could support SEK, at least temporarily.
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