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DOE draw sends Oil.WTI to 3-year high; GBP drops on CPI miss

Summary:

  • Oil.WTI has hit a 3-year peak following the DOE release
  • Pound drops as inflation falls again
  • CAD falls back as BOC keep rates on hold
  • US stocks rise, lifted by Morgan Stanley
  • IMF’s Lagarde envisages big shift to cryptocurrencies

The main story today is in Oil, with the Oil.WTI benchmark rising to its highest level in 3 years after the latest US inventory release. The headline DOE reading of -1.1M was below the -0.5M expected and similar to the API number released last night. Compared to the prior print of +3.3M it is a notable drop and the strong run higher in this release seen in recent months appears to at least have been halted with the last few data points. 

A technical overview of Oil.WTI can be found here. 

 Despite disappointingly slow inflation in the UK economy registered in March market participants do not seem to be concerned about a rate hike in the following month. Nevertheless, the pound is feeling the pain anyway making a retreat from above 1.42 in response to the data. Does it mean a turnaround for the MPC?

As was widely expected the Bank of Canada have announced their decision to keep interest rates unchanged at 1.25% following their latest monetary policy meeting. Overall the statement appears to be erring on the dovish side, with one of the stand out lines being that the BOC "will be cautious with respect to future hikes". The immediate market reaction has seen the CAD drop with USDCAD surging by around 80 pips in the last half an hour.

The US500 has accelerated to the upside after breaking out of prior resistance around 2680 and the market is now looking to extend higher. One of the causes of the latest gains in the index is the latest set of results from Morgan Stanley. With several US banks reporting better than expected results already this earnings season the bar was high, but MS appears to have cleared it with an impressive set of earnings.

International Monetary Fund’s chief Christine Lagarde weighed in writing two interesting posts on the official IMF website to cryptocurrencies. Although she admitted that many of virtual currencies are not likely to survive the process of creative destruction, those which will be able to do so could have a significant impact on how we save, invest and pay our bills

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