MARKET DEVELOPMENT – EUR Drops on Poor PMI, Crude Oil Plunge Relentless
EUR: The slowdown in the Eurozone is becoming increasingly prominent, risks are undeniably tilting to the downside for the Eurozone and this was once again evidenced by the latest PMI figures. In which, both the Eurozone and German metrics all missed expectations, consequently prompting a break below the 1.14 handle for EURUSD. IHS Markit highlighted that the PMI readings indicate Eurozone growth is at 0.3%, with forward indicators such as new orders remaining subdued. Key support is situated 1.13.
CAD: Notable jump in the latest Canadian inflation report, with the headline figure at 2.4% vs. Exp. 2.2%. However, the Bank of Canada’s preferred measures of inflation (Median, Common and Trim) were in fact unchanged, while the Trim and Median metrics saw a revision lower. This in turn saw a kneejerk reaction in CAD. Initial gains were short-lived with the Loonie focusing on the bigger picture, in which crude oil prices are continuing to plunge, which will likely dent inflation in the months ahead.
Crude Oil: Oil bears are firmly in control with prices heading for a 7th weekly loss. Brent has now formed fresh 2018 lows having broken below $60/bbl, despite expectations that OPEC will announce their pledge to cut production. Given the 20% decline in November alone, it is likely that jawboning from both Russia and OPEC will likely take place in the next two weeks ahead of the December 6th Bi-Annual OPEC meeting, in order to offer some reprieve. However, on the technical front, more pain is in store with Brent crude on the verge of forming a “death cross”
Data as of 1310GMT
DailyFX Economic Calendar: Friday, November 23, 2018 – North American Releases
IG CLIENT SENTIMENT Crude Oil Chart of the Day
Oil – US Crude: Retail trader data shows 83.7% of traders are net-long with the ratio of traders long to short at 5.12 to 1. In fact, traders have remained net-long since Oct 11 when Oil – US Crude traded near 7422.7; price has moved 26.4% lower since then. The number of traders net-long is 10.3% lower than yesterday and 12.8% lower from last week, while the number of traders net-short is 17.9% higher than yesterday and 7.9% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil – US Crude prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil – US Crude price trend may soon reverse higher despite the fact traders remain net-long.
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