Fundamental Analysis

Crude prices mixed following a recent rise

Published on 2018-01-16 14:06 Share

Crude oil prices were mixed after rising to their highest levels since December 2014, helped by the dollar’s recent weakness as well as signs that production cuts by OPEC and Russia are tightening supplies. Brent crude futures were down 30 cents or 0.4 percent a barrel after touching a high of $70.37 a barrel on Monday. U.S. crude futures were up 19 cents or 0.3 percent a barrel. The yen halted a five-day advance amid a warning from Japan’s finance minister about excessively rapid moves in the currency market. The euro declined after four sessions of gains and German bund yields inched lower. The focus today on the forex market is on the inflation rates for the UK. There is only one major economic event for the US Dollar, the NY Empire State Manufacturing Index. These are the main economic events for today in the forex market:

The Forex Market

UK Inflation Rate and Core Inflation Rate at 09:30GMT

Higher than expected or increasing readings for the inflation rate are considered negative for the economy and the local currency as they signal lower purchasing power for the consumers, but at the same time are also positive as they signal inflationary pressures in the economy and increase the odds of future interest rate increases by the central banks to fight inflation. A decline on a yearly basis and an increase on a monthly basis for the inflation rate for the economy of UK are expected, but the core inflation rate which excludes the volatile price changes of food and energy is expected to decline on a yearly basis with a reading of 2.6%, lower than the previous reading of 2.7%, and this will signal that there are no intense inflationary pressures for both of the economies, but rather a stable inflation rate.

Italy Balance of Trade at 09:30GMT

The balance of trade is a monetary based measurement of the difference between exports and imports. Exports surpassing imports means a surplus and is healthy for the economy. A trade surplus means that exports are higher than imports, and capital inflows are present which may lead to the appreciation of the local currency, the Euro for the economy of Italy. The forecast is for an increase of the balance of trade surplus with a reading of Euros 5.22 Billion, higher than the previous reading of Euros 4.953 Billion. This is positive and supportive for the Euro.

NY Empire State Manufacturing Index at 13:30GMT

NY Empire State Manufacturing Index measures the general business conditions in the manufacturing sector at the New York State. Higher readings or rising ones indicate improved business conditions and are positive for the US Dollar. It is important to monitor the trends for the readings as they can signal a change in business conditions and economic outlook. The forecast is for a unchanged reading of 18.0, which may be considered neutral..

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