Moment of Truth for OPEC, be ready for volatility ahead

29 November, 2016

Everybody wants a deal, but not everyone is willing to participate in making one. This is how it currently feels with just 24 hours before ministers from OPEC meet to reveal their strategy for ending a 3-year global supply glut. Iran and Iraq remain to be the major obstacle to any meaningful production cut, and Saudi’s energy minister comments on Sunday that the market would balance itself in 2017 even if producers did not intervene brings more pessimism and doubts than hopefulness over the long-term outlook.

Although it might be true that markets will rebalance in 2017 whether a production cut is reached or not, oil bears are just waiting for a signal to push the sell button, and 15% decline towards $40 looks very reasonable incase no significant deal was reached.  However, markets still believe that a production cut of 500,000 to 1 million barrel per day is achievable tomorrow and this explains Monday’s price action where both major benchmarks rose by more than 2%.

A meaningful deal is required more than ever as GCC economies fiscal deficits continues to widen and lower public spending is weighing heavily on growth, but given the political differences between OPEC members there’s a high chance we’ll end up with only a face saver deal.

Traders should be prepared for a volatile session ahead with many headlines to hit the wires in the next 24 hours and this volatility will spread beyond oil to equities and fixed income markets.

The dollar rally coming to an end?

Profit taking and mild declines in U.S. treasury yields pulled back the U.S. dollar slightly from its 13-year highs. Most of the sell-off was seen against the Japanese Yen which recovered almost 1.5% from its lowest levels since February. Monday brought the question on whether the rally on the U.S. dollar was over, or it’s only a slight correction before it resumes the uptrend? To answer this question, we need to know what is the Fed thinking of. Will they raise rates in December and wait longer for a second hike? Or a series of hikes will be projected for 2017? A couple of Fed presidents are scheduled to speak this week, and if they indicate that tighter monetary policy is needed in 2017 the dollar rally will likely resume, if no guidance is given then traders should rely on economic data, specifically Friday’s non-farms payroll. However, any declines in U.S. dollar are likely to be minor especially against the Euro and the Pound given that many political tensions are likely to hit the Euro Area in the next couple of weeks.  

Source link  
Turkish crisis spreads into markets

The Turkish Lira resumed its drop early Monday touching a new record low of 7.21 per dollar before recovering slightly during Asia trade. Comments from...

Stocks surge amidst USD weakness

The major winner today was the US stock market as it continued to surge higher on corporate earnings and an upbeat jobs report as JOTLS openings came in strong...

Is Trump truly winning the trade war?

Escalating trade tensions between the U.S. and China remain the financial markets hottest topic. President Trump seems to be celebrating...

BoJ unwilling to shift gears yet

After weeks of speculation that the Bank of Japan may begin to adjust its stimulus program, the central bank once again decided not to join the global trend...

Oil and equities jump on global events

Oil is back on the move again after the recent attack against a ship off the coast of Yemen carrying oil. The Saudis have suspended shipping around that area until the...

USD and Oil in focus

The USD lifted again against all majors, as US retail sales m/m came in strong at 0.5%, in line with expectations. At the same time the previous month was...

Investors in cautious mode

Global equity and foreign exchange markets were relatively quiet on Wednesday as the U.S. financial markets were closed in observance of Independence Day...

Recession fears rise as trade war heats up

It has been an interesting first half for 2018. Economic fundamentals and politics took center stage as both fought for market influence.

Relentless rout for emerging currencies

While the speed of selling has slowed down compared to the early part of the week, emerging market currencies have continued to show...

In the past 24 hours Bitcoin has gained 0.48% and reached $6306.3951938. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -2.3522% and is now at $1.1335. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -21.25% and is now at $284.027431523. Have the most popular cryptocurrencies compared online 24/7.

Top Brokers offering Forex Market Analysis

Forex Currencies Forecasts

Top 10 Forex Brokers 2018

# Broker Review
5FIBO GroupFIBO Group78%