News & Analysis

U.S stocks flat; Oil enters bear market levels losing 21%; USD lifts after Fed signals further rate rises

Nov 8, 2018 | Market Updates

Upcoming high impact news:

11:30 AUD RBA Monetary Policy Statement
20:30 GBP – GDP – Pre-Lim GDP – Manufacturing Production
00:30 USD PPI

Mixed session overnight for U.S stocks, the Dow Jones added 10.92while the S&P500 lost 7.06 and the Nasdaq dropped 39 points. The SP500 snapped a 3-day winning streak after the Federal Reserve statement. The central bank said in a statement it expects “further gradual increases” in the overnight rate.

The Fed has hiked rates three times this year and is forecast to raise them once more before year-end. “Our guess is the Fed’s going to be gradual. They don’t want to force the issue,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors. “They definitely don’t want to be the ones to invert the yield curve.”  Post-mid-terms trader sentiment remains high and some analysts are looking for further gains to the end of 2018.

Oil once again gave up London session gains to move lower during the NY session, price entered bear market territory hitting 60.67 a loss of 21% from its 52 week high. Signs of growing supply even as data showed record Chinese oil imports is worrying traders.

This week U.S production hit a record high at 11 million bpd, the other top producers, Saudi Arabia and Russia, have been dialling up production since June. “All three of them are continuing to pump at record levels, that’s been … part of what’s causing oil to move into a bear market,” Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions, told CNBC’s “Worldwide Exchange” on Thursday. “I think the market is grappling with some fundamental uncertainties,” she said. “We don’t know if we are oversupplied or undersupplied.” – CNBC

The USD gained after the FOMC, risk currencies moved lower after a mainly stronger week. The AUDUSD closed 64 pips lower the GBPUSD lost 67 pips. The majors were mixed to the Yen, the AUD continued to gain while the EUR finished slightly lower and the GBP ended Thursday flat. The USD had a strong session to the Yen jumping by 57 pips moving back in the 114 handle. Gold closed lower for the 5th straight session losing 2.70. Equity markets where weaker but a stronger USD maintained selling pressure. 

Local shares are slightly lower down 6 points. Sterling traders will now be moving focus to tonight’s GDP and prelim GDP data at 8:30 pm. It’s a busy slot as manufacturing production data will also be released at the same time.

Good Trading from Eightcap Sources; CNBC – All times are AEDT

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