Amana FS Market News
Brent crude came close to the psychological $80.00 mark in today’s trade, but didn’t manage to break above. This has been the fifth attempt of Brent buyers to break above this important mark since Brent made the 2018 high of $80.80 back in May. Technicals remain supportive for the commodity, with the 200-day MA currently hovering around the $71 level and the price making consecutive higher highs and lows on the daily chart.
Fundamentals are supportive as well, as market concerns over an Iran supply outage were one of the main drivers of the recent bull run in Brent crude. Iran’s crude oil exports fell to the lowest level in more than a year in August, with sales of just 2 million barrels per day. Markets expect that certain Asian customer will further reduce their oil imports from Iran, in order to comply with U.S. efforts to bring Iranian oil export to zero.
Yesterday’s EIA report on US crude oil inventories eased market worries somewhat, as the numbers have come in better than expected for the first time since August 22. Crude oil inventories in the United States dropped 2.1 million barrels in the week ending September 14, while forecasts were set at a 2.7 million barrels fall.
Nevertheless, the $80.00 mark remains a tough nut to crack, and I would remain neutral as long as Brent trades below that level. As of 14:55 London time, Brent traded at $78.86.
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- Norway’s Norges Bank hikes rates 0.25 basis points bringing rate to 0.75%
- Norwegian Krona dips Vs the euro on dovish forward guidance
The Norwegian Krona has fallen sharply lower against the euro currency this morning despite Norway’s Norges Bank hiking interest 0.25 basis points, marking the central bank’s the first rate increase in seven years. Norges Bank signalled a slower pace for future hikes, sending the EUR/NOK pair close to one per cent higher.
The fast-moving EUR/NOK cross-pair has so far traded to 9.6185, breaking above its 100-day moving average, after a slight pullback from its intraday top, buyers are currently probing the pair’s key 200-day moving average, at 9.6066.
Inside the policy statement from today's dovish rate hike from the Norges Bank, policymakers acknowledged faster economic growth and higher inflation in the domestic economy, although Governor Oeystein Olsen said the key policy rate would most likely be increased further in the first quarter of 2019.
In-line with other central banks the Norges Bank also highlighted the risks of a global trade war and the ongoing instability in emerging market instability as downside risks to the Norwegian economy.
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The New Zealand dollar soared against most major counterparts as the second-quarter GDP growth came in at 1.00%, better than economists’ forecasts of a 0.8% increase and the first quarter's reading of 0.5%. In annualised terms, the GDP increased by 2.8%, beating market expectations of a 2.5% rise.
According to the report, the growth was broad-based, with 15 of 16 industries up. Service industries were the main driver of the GDP beat, printing a rise of 1.0% over the second quarter, closely followed by goods-producing industries which were up 0.9%.
Before the report, the Reserve Bank of New Zealand had a second-quarter GDP forecast of only 0.5%, mainly because of deteriorating business confidence which was at a 10-year low in August and its impact on investments. As a result, the RBNZ even hinted that a rate cut is on the table if economic numbers disappointed.
Following the GDP beat, market concerns over a rate cut have eased, making the kiwi one of the best performing majors in today’s trade so far. The NZD/USD pair reached its best September levels, although the general downtrend remains in-tact. A break above the upper channel resistance could send the pair up to the August 28 high of 0.6725, while the September 6 high of 0.6615 acts as a short-term support to the downside.
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- August monthly UK retail sales +0.3% Vs -0.2% expected
- Year-on-year UK retail sales +3.3%Vs +2.3% expected
The British pound trades higher against the U.S. Dollar after much better than expected retail sales data from the United Kingdom. The UK consumer outperformed market expectations in August, as monthly retail sales expanded +0.3% against expectations of a -0.2% drop.
The year-on-year figure also sharply beat market consensus forecasts, as it climbed +3.3% against the +2.3% number expected. The UK Office for National Statistics acknowledged strong summer spending saying that food and household goods stores particularly benefitted from the warm weather when compared with last summer.
The British pound had been on the rise against the greenback this morning virtually erasing yesterday’s sudden losses following the negative Brexit headline on the Northern Ireland border issue.
After the GBP/USD pair’s initial pop higher to 1.3205, price is currently hovering around the 1.3190 level, with the current weekly high, at 1.3213 still intact. Key resistance is found at the 1.3255 and 1.3300 levels, while key support is found at the 1.3140 and 1.3100 levels.
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The Swiss National Bank kept rates unchanged at today’s monetary policy meeting, continuing with its ongoing approach of not intervening. The interest rate on sight deposits at the SNB remains at -0.75% - the lowest among major central banks – and the three-month Libor target range is held steady at between -1.25% and -0.25%.
The Swiss franc has been heavily appreciating against major counterparts since the beginning of the year and has gained more than 6% against the euro since April, driven by safe-haven demand amid increased political risks in the region. As a result, market positioning is overly bearish on the currency as participants believe the SNB won’t allow the Swiss franc to appreciate more. Nevertheless, the central bank has restrained from market intervention so far, which could spur speculation that the SNB is fine with a strengthening franc and lead to a reversal in the heavy bearish positioning in the currency.
In a statement following today’s meeting, the SNB noted that the Swiss franc is highly valued and that the bank’s willingness to intervene in the FX market remains essential to ease pressure on the currency. The SNB also downgraded the inflation outlook to 0.8% for 2019, and 1.2% for 2020 as a result of franc’s appreciation. According to the statement, Switzerland’s economy performs stronger than originally reported and economic signals remain favourable over the coming months, printing an annualised growth of 2.9% over the second quarter of 2018.
According to the latest CoT report, the Swiss franc was the third largest held short with a total short position of -$4.55 billion.
The Swiss franc spiked sharply lower against the US dollar following the release but rebounded somewhat to trade at 0.9664, as if 9:01 London time. The EUR/CHF pair followed a similar pattern and traded at 1.1312 at the time of writing.
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- UK monthly retail sales expected to decline -0.2% in August
- Year-on-year August UK retail sales expected to rise +2.3% Vs 3.5%
The British pound is on the rise against the U.S. Dollar this morning, as buying interest returns after yesterday’s sharp dip lower following bearish Brexit headlines over the North Ireland border issues.
The United Kingdom economy releases key retail sales data this morning, with expectations tilted to the downside for the month of August. The last set of UK retail sales figures saw a sharp upside rebound, rising +0.7%, as the World Cup and hot summer boosted UK consumer spending.
UK monthly retail sales are set to contract in August, it will be interesting to see the ONS report following the release and if economists expectations hold true. Yesterday’s CPI data showed that the inflation is on the rise in the UK, increasing calls for a rate hike.
Brexit is of course the other key driver today, as British PM May appeals to European Union leaders to accept her proposed Chequers deal. Expect sterling to remain volatile, as headlines continue to come from the leaders summit and the deadlock in the Northern Ireland border issue persists.
Key support for the GBP/USD pair below the 1.3100 level is found at the recent swing-low, at 1.3058 and the key 1.3000 handle. To the upside, bulls need to break the current weekly high, at 1.3213 in order to encourage further buying towards the 1.3255 and 1.3300 levels.
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