- Crude oil analysis: What does OPEC+ delaying meeting means?
- GBP/USD analysis: Cable drops after autumn statement
- US dollar rebounds on mostly stronger data
Crude oil analysis: What does OPEC+ delaying meeting means?
The OPEC+ was due to meet on 26th, but it has now moved to 30th November. No reasons were given for the delay, but that hasn’t stopped the market from speculation that that there might be a rift between some of the members. It is clear that Saudi is dissatisfied with some of the other OPEC+ members who are not complying with the cuts. The delay of the meeting has sent prices lower because it increases the risk of the Saudi’s removing their additional voluntary cuts to the tune of 1 million barrels per day that has been in place since July. I mean you would be very annoyed if you are voluntarily cutting output beyond the agreed limits, when others are not backing you up. So, they will want to hear some assurances that moving forward the rest are complying sufficiently in order to keep prices stable (i.e., high).
WTI remains inside a falling wedge pattern. It will require a break above the bearish trend around $77.60-$78.50 area, where we also have the 200-day average coming into play, to trigger follow-up technical buying. Key support is seen around $72.70.
GBP/USD analysis: Cable drops after autumn statement
The GBP/USD fell slightly in the first half of Wednesday’s session, but it is not clear whether the drop was related to the budget announcement or a general rebound in US dollar, given that other major FX pairs were also trading lower.
Overall, the market’s reaction to the autumn statement was minimal. The tax cuts that were announced could help to boost output but may also increase inflationary pressures at the same time. These offsetting factors left pound traders scratching their heads. Traders seem happy to keep the GBP/USD under pressure for now, after it broke support the 1.25 area.
Previously, the cable was boosted primarily by a weaker US dollar amid hopes we have passed the peak interest rates there. However, the dollar has staged a bit of a recovery today on the back of mixed data and ahead of Thanksgiving. So, the fact that the GBP/USD has fallen along with other FX majors, while the EUR/GBP has barely moved, means that the impact of the budget was indeed minimal on FX markets.
US dollar rebounds on mostly stronger data
- Unemployment Claims 209K vs. 226K expected and 233K last
- Durable Goods Orders -5.4% m/m vs. -3.2% expected
- UoM revised Consumer Sentiment 61.3, Exp. 61.0, Last 60.4
- UoM revised 1-year inflation expectations 4.5%, Exp. 4.4%
The drop in US unemployment claims was noticeably more than expected, suggesting that the jobs market is not cooling as fast as some had hoped. What’s more, inflation expectations rose further while consumer sentiment improved more than expected, according to revised figures from the closely watched University of Michigan’s surveys. This is marginally bullish for the dollar as it will discourage the Fed from cutting rates sooner, all else being equal. Still, with a couple of other US macro pointers coming in weaker of late, including durable goods orders today, it will take a lot more than just a couple of better-than-expected data release to change the ongoing narrative that the Fed is done with rate hikes and that the next move would be a rate cut.
The dollar may therefore be unable to rally significantly, which means the downside for the GBP/USD could be limited. At the time of writing, however, it was still testing the session lows.
Source for all charts used in this article: TradingView.com
-- Written by Fawad Razaqzada, Market Analyst