News & Analysis

Dow Jones’ New Records; Catalan Fears Ease; Oil Jumps Supply Rebalancing

Oct 11, 2017 | Daily Market Outlook

Key data release for today:

  05:00 AEDT (THURS) – USD – FOMC Meeting Minutes

There were new records overnight as the Dow Jones added 69.61 to close at 22,830.68 and the S&P500 added 5.91 to finish at 2550.64. Wal-Mart’s buyback announcement was most likely the key driver for the Dow. Wal-Mart announced a 20 billion buyback before the opening bell and reiterated its outlook for the current fiscal year.

There was also rumor that Google was planning to buy Apple however this turned out to be a technical error (or as the markets call it ‘fake news’).

Europe, on the other hand, had a mixed session with Catalan dragging on some indices. The FSTE finished 30.38 higher and the DAX finished -27.15 lower. Stability looks to have emerged from the Catalan issue with President of Catalonia, Carles Puigdemont, asking for a mandate to declare independence. In a sign of stability, the Catalan leader has paused looking to diplomacy for talks with Spain.

Oil rose overnight, adding 143 cents to close back above $51.00. The buy-up was most likely driven by signs that the market is re-balancing:
⤍  Saudi Arabia will cut crude allocations for November
⤍  OPEC is confident that market re-balancing is under way
⤍  About 85% of the U.S. Gulf of Mexico’s production remains offline after Hurricane Nate, lending support to prices

USD was mainly mixed overnight and falls to the Japanese Yen and Canadian Dollar. Gold lost some glow, finishing $3 higher but $7 from session highs. AUDUSD, GBPUSD and EURUSD all finished higher with EURUSD back at September’s highs, 68 pips higher for the day. This morning, the AUDUSD was trading slightly higher and the ASX200 trading 20.50 points higher with strong US leads.

EURUSD – strong rally yesterday with price finished 68 pips higher, levels not seen since September. 1.1845 is the next level above.If positive factors continue, we could see traders test that level. Currently, there’s a short term resistance hurdle beat first.

Oil – strong jump as re-balancing signs emerge. Price has started to consolidate on the 4H, forming a weak pendant. Often, traders would be looking to see how price reacts to current resistance point at $51.15.

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