Crude oil has been on a roller coaster ride today. It started out this morning building on yesterday’s gains with WTI taking a run at $50.00 but then was slammed back after DOE US inventories rose more than expected, countering the API positive surprise, implied demand fell and production increased. Into the afternoon oil stabilized near $48.50 with traders now trying to figure out what to do next. The main event for Asia Pacific traders today is the return to trading of mainland China markets from a week of holidays. Markets have moved higher over the last week, particularly the Hang Seng and China H indices so a catch up rally appears possible. Last week’s disappointing PMI figures could have an influence but so could the IMF’s show of support, maintaining its GDP forecast for China this year despite cutting other countries like Japan. Support or weakness for mainland markets could spill over into related markets like Hong Kong and Australian indices, commodities like copper and crude oil and currencies like AUD and NZD. Japan may also attract attention once again as traders try to figure out from the monthly economic report if the Bank of Japan could be planning to bring in more QQE stimulus at its next meeting later this month. Comments after yesterday’s meeting suggest that with the Bank expecting inflation to continue increasing, the pressure could be on for the government to do more on the fiscal side instead of the monetary side. NZD and AUD have levelled off overnight after big rallies yesterday as stock markets also have essentially been trading sideways. Canadian stocks have been among the stronger performers, led by the mining and energy sectors, which bodes well for the resource weighted Australian market today. Tomorrow focus is likely to remain squarely on central banks with monetary policy speculation driving trading action. The Bank of England is expected to stand pat again, while the ECB minutes may be scrutinized for signs of whether more QE stimulus is being considered or not. FOMC minutes have probably been overwhelmed this time by member projections and subsequent member comments. Of tomorrow’s slate of speakers, Minneapolis Fed President Kocherlakota may attract the most attention with traders looking to see if he will own up to being the FOMC member who called for negative interest rates as had been widely speculated. Corporate News There have been no major announcements after the US close today Economic News Significant announcements released overnight include: US crude oil inventories 3.0 mmbbls vs street 2.2 mmbbls US gasoline inventories 1.9 mmbbls vs street 0.25 mmbbls US implied demand 15,801 mbbls vs previous 16,085 mbbls US crude oil production (July) 9,358 mbbl/d vs previous 9,264 mbbl/d UK BRC shop prices (1.9%) vs previous (1.4%) UK industrial production 1.9% vs street 1.2% UK manufacturing production (0.8%) vs street (0.2%) Canada building permits (3.7%) vs street 0.3% Germany industrial production 2.3% vs street 3.3% Spain industrial output 2.7% vs street 4.7% Norway industrial production 3.1% vs previous 2.8% Upcoming significant economic announcements include: 10:50 am AEDT Japan machine orders street 3.5% 4:00 pm AEDT Japan BoJ monthly economic report 7:00 am BST Germany trade balance street €19.0B 10:00 am BST Greece unemployment rate street 25.4% 12:00 pm BST UK interest rate and QE 0.50% & £375B no change expected 12:30 pm BST ECB meeting minutes 8:30 am EDT US jobless claims street 274K 8:30 am EDT Canada new house prices previous 1.3% 9:30 am EDT FOMC Bullard speaking 10:30 am EDT US natural gas street 99 BCF 1:00 pm EDT FOMC Kocherlakota speaking 2:00 pm EDT FOMC meeting minutes 3:30 pm EDT FOMC Williams speaking 4:00 pm EDT Alcoa earnings CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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