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Oil rises after DOE; EURUSD falls to 5-month low

Summary:

  • Oil rises after DOE inventories show -1.4M 
  • EURUSD hits 5-month low on Italian political concerns 
  • Precious metals extend their decline
  • Where next for AUDNZD after RBNZ meeting
  • CRBT attempts to calm TRY sell-off

The latest crude inventory data from the US has shown a second consecutive drop and boosted the price of Oil to its highest levels of the day. The DOE number showed a decline of 1.4M barrels in the past week, which is marginally below the -1.1M expected with the prior reading -2.2M. The reaction seen in the market with Oil moving higher by around 60 cents is likely due to today’s number relative to last night’s API, which showed a large an unexpected rise of 4.8M. 

technical overview of Oil.WTI can be found here. 

News that the political gridlock in Italy is set to come to an end has been met with a negative reaction in the markets after a leaked draft revealed plans to defy the EU rules on migration and debt. Italian stocks have fallen on the news and the impact can also be seen in the Euro, with the single currency falling lower against the vast majority of its peers. The EURUSD had earlier fallen below the 1.18 handle to trade at its lowest level since December.

There’s been more downside seen in the precious metals today, with Gold falling to its lowest level of the year. Yesterday we pointed out that Gold had taken out key support around 1301 following the release of US retail sales and after an uncharacteristically quiet year so far, there could be a significant breakout in play.

 The first several months of 2018 have not been supportive of the Australian and NZ dollar at all. Over the course of the recent days and weeks things have evolved, and it may turn out to be AUDNZD positive. The latest RBNZ meeting saw inflation forecasts being revised down, while Orr suggested that a rate slash could be potentially on the table, and it may be a worth considering as soon as next year.

The beginning of Wednesday’s trading had begun with another massive sell-off of the Turkish currency, but things changed completely when the central bank said it was ready to take ’necessary steps’ in order to stem the ongoing lira’s free-fall. The USDTRY earlier hit its highest ever level but has fallen back and actually trades lower on the day.    

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