Consensus states there would be no cut in Oil production

Fundamental View

Yesterday afternoon saw comments from the meeting between Saudi Arabia, Mexico, Russia and Venezuela hit the wires with some conflicting commentary from each. The market, having priced in a cut in production on Thursday, saw a reversal in the gains we saw since Monday as the consensus agreement stated that there would be no cut. The countries however did stipulate that the price of oil would be closely monitored for the foreseeable future and that ultimately price below $80 is ‘not good’. Looking closer at the commentary which has surfaced overnight from other OPEC member nations we have seen both Iraqi and UAE OPEC delegates in favour of an oil production cut, with the UAE representative stating “we will do whatever it takes to balance price.” Iranian Oil Minister also entered this space with comments stating that Non-Opec Nations should contribute to a cut; such jibber-jabber is unlikely to hold any weight ahead of the meeting tomorrow as the large developments in this area have already occurred. In addition to this, we have had Constancio supporting Draghi’s dovish position. This went some way to support European bourses in the mornings session and allowed the EURUSD to move lower below 1.2450 in the wake of comments stating that sovereign bond purchases could be made in secondary markets as early as Q1 of 2015. This saw the continuation lower of the Euro against the majority of currencies, most notably the pound as we also saw sterling strengthen due to in-line GDP data and better than expected data cross Government spending, Private consumption and imports.

Today’s View

This afternoon we are looking at very dense data calendar, with Thursday’s and Friday’s data coming ahead of Thanksgiving and Black Friday. We have Durable Goods expected at -0.6% MoM at 1330; this number is largely affected by orders from large cap manufacturers/industrials such as Boeing or Caterpillar but there has been no real news of late in this space so the number is largely expected to be in-line. Initial Jobless claims are also expected to be released, estimated at 288k and continuing claims at 2350k. This should be closely monitored and although we expect this number to post another sub-300k figure, please be aware when trading this data-set as it is a linchpin figure the Fed will use to gauge the rate-hike. We will also have Personal Income, PCE Deflator, Chicago Purchasing Manager’s index, University of Michigan, Pending and New Home Sales, rounding off with DOE Crude oil inventories. This data calendar is therefore likely to be highly volatile ahead of Thanksgiving as traders move to close positions for the holiday.

Alternative View

Today’s data session is likely to be fast and furious. It is recommended that traders remain data-wary as we have reports coming in from multiple facets of the US Economy. Housing data and Consumer Confidence to take precedent.