Daily Report (Market Drivers & Snapshot) – 19/04/2018

OPEC and Russia will meet tomorrow in Jeddah
Dow Jones 24726 / Dax 12590
Oil $69.03/bbl
Gold $1347/oz
UK: Retail Sales m/m actual -1.2% vs -0.5% expected.
EZ: Current Account actual 35.1B vs 332.3B expected.
North America: Light calendar.

OPEC and Russia will meet tomorrow in Jeddah to discuss ways of prolonging their cooperation, and new inventory targets that extend their output cuts beyond this year as they aim to eliminate a glut. The meeting will play out against a backdrop of falling stockpiles and geopolitical tensions that have lifted prices, which in turn risk encouraging more U.S. supply. From Bloomberg: “Prices rose as investors focused more on the drop in U.S. inventories” than the continued gains in production, Satoru Yoshida, a commodity analyst at Rakuten Securities Inc., said by phone from Tokyo. “If there is no indication at the OPEC meeting that they will continue to cut production beyond 2018 that could drag down crude prices.”

The Sterling continued today its fall after the retail sales data, the Euro still under pressure from the worse than expected economic figures. Yet the market is still on defense from the uncertainty over what President Trump’s next geopolitical move would be.

Bank of Canada Governor Poloz said yesterday that the economy is not yet able to stay at full capacity on its own and therefore interest rates may need to remain below the neutral range. He also sees companies hesitant to invest because of NAFTA risks. As a result, the BoC feels they need to be data dependent and the pace of rate hikes is a considerable question mark as headwinds prevent a full recovery. The USDCAD gained directly but gains were limited under the 1.27 level because of the crude oil hitting a new 3 years high. OPEC meeting will be decisive for both the Loonie and the crude oil.

Today North American calendar is light, no major economic news. The market will be following any comments from OPEC ministers and of course any hints concerning the geopolitical uncertainty.

Today’s Snapshot

DAX-M18 Last 12590

The DAX crossed the 12600 level two days in a raw but couldn’t close above it. That is preventing a decisive breakout above 12,600. The market is fluctuating higher and lower around the key February high of 12,600 this indecisive phase of trading continued into the early moves of today’s session. The run of higher lows continues to build above the six week pivot at 12,160 with support at 12,256 and 12,375. A close above 12,600 suggests the bulls are finding traction, with opening to 12,745 and 13,000 next resistance levels.

 

Written by:
Nehmat Harb
Financial Advisor

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