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Daily Market Outlook By PYX Markets
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[QUOTE="PYX Markets London, post: 111539, member: 38730"] [b]Daily Market Outlook 11th October [/b] [img]https://scontent-amt2-1.xx.fbcdn.net/v/t1.0-9/13938553_118457278597764_4706199327588223406_n.jpg?oh=4cb4000aa052d5b9cf8c6e211c4ac665&oe=581DD5BC[/img] Asian shares were mostly lower on Tuesday, while oil prices hovered near one-year highs on growing expectations of an output cut by OPEC producers. The overnight gains came after Russia said it was ready to join the OPEC in limiting crude output and Algeria called for similar commitments from other non-OPEC producers. OPEC aims for agreements to cut about 700,000 bpd in its first reduction in eight years. "OPEC needs to make sure we don't crimp too tightly and create a shock to the market. We are going to be very responsible," Saudi Arabia's Energy Minister Khalid al-Falih told the World Energy Congress in Istanbul, adding that OPEC needed to behave in a balanced and responsible manner. Last month in Algiers, OPEC agreed modest oil output cuts. The goal is to cut production to a range of 32.50-33.0 million bpd. OPEC's current output PRODN-TOTAL is a record 33.6 million bpd. Non-OPEC oil producer Russia's President Vladimir Putin welcomed the global cut invitation, saying Moscow was ready to join the proposed cap on oil output by OPEC members. Putin said low oil prices had led to underinvestment in the global energy sector which would turn into a deficit at some point and trigger new "unpredictable jumps" in prices. The dollar extended overnight gains on growing expectations that the Federal Reserve will raise interest rates this year. Investors are looking to Wednesday's release of minutes of the latest Federal Reserve Open Market Committee meeting to see how close the Fed was to hiking rates last month. The dollar firmed on Tuesday, while the beleaguered sterling wallowed near recent lows on lingering fears about the impact on Britain from exiting the European Union and the kiwi tumbled on dovish comments from a New Zealand central bank official. Japanese, Canadian and some U.S. markets were closed on Monday for holidays. Investors awaited Wednesday's release of minutes of the Federal Reserve Open Market Committee's September meeting for clues as to how close the Fed is to hiking interest rates. Speaking to reporters after a speech in Sydney, Chicago Fed President Charles Evans said on Tuesday that he "could be fine" with the Fed raising rates in December, but he wanted to see how the economy and inflation progressed before deciding. Evans does not have a vote this year on Fed policy but participates fully in deliberations and will become a voting member in 2017. Japanese current account data released earlier on Tuesday showed the nation's surplus stood at 2.0 trillion yen ($19.3 billion) in August as the trade balance swung to a surplus due to falling imports. BoJ is expected to wait until next year before easing policy further unless any sharp spikes in the yen undermine the economy significantly in the meantime, a Reuters poll found. Last month the central bank switched the focus of its stimulus program to targeting market interest rates after years of massive asset buying failed to push up inflation. About 70 percent of the analysts who answered an extra question said the BOJ would add more stimuli at its January meeting or later, while a handful of analysts predicted the central bank would ease further at its Oct. 30-Nov. 1 meeting when it releases its long-term growth and inflation outlook. But several analysts said the central bank would keep to its current pace of stimulus, saying they had no specific forecast of when it would next take action. The BOJ dropped its explicit target of increasing base money by an annual 80 trillion yen ($777.45 billion), in what some analysts said was a tacit admission its aggressive asset-buying was becoming unsustainable. Kuroda said the central bank will deepen negative interest rates or expand asset purchases if external shocks hit the economy but he also said he saw no immediate need to top up stimulus. Oil prices on Tuesday fell from one-year highs touched the previous day as there were doubts that a planned production cut would have the desired effect of reining in over two years of global oversupply. Oil prices jumped as much as 3 percent on Monday, with Brent hitting a one-year peak, after Russia and Saudi Arabia both said a deal between the OPEC and non-OPEC members like Russia in curbing crude output was possible. However, Goldman Sachs said in a note to clients on Tuesday that despite a production cut becoming a "greater possibility", markets were unlikely to rebalance in 2017. "Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017," the U.S. bank said, and added that even if OPEC producers and Russia implemented strict cuts, higher prices would allow U.S. shale drillers to raise output. Fritsch said he had "significant doubts whether they (production cut targets) will actually be fulfilled" as the rivalry between OPEC members, who are fighting aggressively for global markets share, could prevent an effective deal. And for now, supplies keep flowing, with top exporter Saudi Arabia planning to send full contracted crude volumes to key Asian buyers in November, unchanged from October levels, industry sources familiar with the matter said on Tuesday. [/QUOTE]
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