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Oil higher on IEA release amid benign FX session

Taking a look at markets one could notice that oil prices are among the largest beneficiaries (except for Bitcoin) which have been propped up by the IEA release. The International Energy Agency lifted its forecast for global oil demand by 0.1mb to 1.6mbpd foretelling the strongest demand growth in two years. Furthermore, OPEC and its allies have said that a six month extension to supply curbs from the end of March 2018 is one of the options being considered. In effect, WTI prices are upping 0.9%, while Brent prices are rising 0.6%.

As far as the FX market is concerned, the Canadian dollar has been the best performer so far, obviously on the back of higher oil prices. Elsewhere, the British pound has been closely watched after the jobs report. The UK’s jobless rate declined from 4.4% yoy to 4.3% yoy in July achieving the lowest level since 1975 and being lower than the BoE’s equilibrium rate. Furthermore, employment growth accelerated at the same time to 181k from 125k seen in the prior month, the biggest increase since the end of 2015. However, it goes without saying that it’s all about wage growth at this stage of things which disillusioned once again.

The Asian session proved to be quite equivocal. On the one side, the NIKKEI (JAP225) managed to close up 0.45%, on the other one the Hang Seng (HKComp) gave back some of its valuation once again. Even as Wall Street closed higher, investors across Europe seem to be more careful. On top of that, a technical view of the DE30 might warrant more caution as well.

It was a relatively upbeat session in Asia with the Korean Kospi 200 (KOSP200 on xStation) seeing gains as high as 0.8% and Nikkei (JAP225 on xStation) adding 0.5% on its own. The Chinese equities were left in the cold though with Shanghai flat and Hang Seng CE (CHNComp on xStation) actually down 0.4%.

Everybody knows how meaningful for markets might be comments, opinions or some remarks voiced by prominent people. There is no doubt that Jamie Dimon, CEO of JPMorgan Chase, is among them. He did not beat around the bush talking about cryptocurrencies yesterday and suggested that he would fire any employee trading Bitcoin for being “stupid.”

Having regard to the BoE meeting on Thursday we provide a short video analysing 3 GBP pairs (GBPUSD, GBPJPY and EURGBP) that could be particularly sensitive to the event.

Looking forward, there will be a US PPI reading which might be a good prognosis ahead of CPI which is scheduled for tomorrow. Otherwise, oil traders might be satisfied as the DoE is going to unveil its weekly numbers on the US oil market.

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