Fundamental Analysis by Alpari

Alpari

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Pound Trying to Get Back Losses

The Brexit is still keeping market participants in a tense state. Some are running for the safe assets due to worries in regards to the consequences of the UK leaving the EU. During the Asian session the pound/dollar fell to 1.2791 where it received support from a lot of buys.

Over the course of nine hours the rate recovered 184 points to 1.2975. Other currencies strengthened against the dollar together with the pound. It’s worth noting that, during trades in Europe, the Japanese yen and gold both rose. This means the dollar is weakening throughout the market.

It seems to me that traders are fixing profit for long positions before the US Fed minutes and data from ADP (Automatic Data Processing) on private sector employment. Due to Independence Day, the ADP report is out on Thursday. It’s expected that 151k jobs were created in the US private sector throughout June.

The main event of the day is the Fed minutes being released. Before they come out, the ISM business activity index in the service sector will be out, in addition to May data for external trade. At 23:55 EET, the American institute for oil is publishing its oil reserve report.

The euro/dollar is sticking so far to my morning’s forecast and closing the daily candle around 1.1053. The pound has bounced sharply from 1.2791. After such rebounds pairs often head sideways, just as happened for this pair on 30th June after a ricochet from 1.3205.
 

Alpari

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Political events having little effect on markets

The tension throughout the world from Nice and Istanbul to Yerevan and Almaty is, unexpectedly, having less of an effect on world markets than one would have thought. The majority of financial markets on Monday were lacking in volatility, with oil dropping from $47.9 to $46.5 per barrel of Brent despite the geopolitical risks. By the end of a rather quiet Monday, the prices managed to restore to $47.0 and on Tuesday morning Brent was trading in a $46.7-$47.0 per barrel range. This evening will see the API’s oil report out.

Yesterday’s varied closing of world stock markets was supported this morning by Asian markets. The Nikkei 225 rose by 0.9%. The ASX Australia was down 0.2%. The Shanghai Composite decreased 0.7%, and the Hang Seng was down by 0.6%. Futures for the S&P500 were trading at 2157; 0.1% below the closing level of the previous trading day.

An increase of up to 100 freight trains from China to Europe is expected in 2016. By 2020 this indicator is expected to have risen to 2,000 trains: 80,000 containers with an estimated worth of 78.3 billion yuan. The reason for such increases is plans for high trading activity between China and the EU. The volume of bilateral trade for the first five months of this year amounts to 1.39 trillion yuan and, as such, the EU remains firmly planted as China’s major trading partner.

The USD was trading slightly down against the yuan at 6.6987 (-0.0058or -0.09%).

Whilst waiting for the ECB to convene, the euro/dollar isn’t very active. It strengthened slightly from 1.1040 to 1.1075 on Monday and on Tuesday morning was trading in a narrow range of 1.1065-1.1080. Today is quite busy from the perspective of economic news, with stats from the UK, Germany (+ EU data) and the US all to play their part. In-the-spotlight Turkey will see its central bank convene to make an interest rate decision after the failed coup at the weekend.
 

Alpari

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DIJA setting records

Tuesday’s API oil report showed a fall in reserves totalling 2.3 million barrels, although the quotes for the commodity were hardly affected by this. Brent attempted a spurt to and beyond $47.4 per barrel, but was pushed back to $46.7 by the end of the day. At the Asian session on Wednesday, oil was trading in a $46.6-$46.8 range. This evening some more oil reserve stats will be out from the EIA. Reserves according to this report are also expected to have fallen by 2.333 million barrels for the week after a previous 2.546 million barrel fall.

After yesterday’s close of the US DIJA at a new maximum, the Asian markets this morning were off in different directions. The Nikkei 225 fell by 0.4%. The ASX Australia was up 0.4%. The Shanghai Composite decreased 0.1%, and the Hang Seng was up by 0.8%. Futures for the S&P500 were trading at 2157; 0.1% below the closing level of the previous trading day.

For the first half of 2016, China’s non-financial direct investment overseas rose 58.7% YoY to 580.28 billion yuan. In particular, Chinese investors in June were invested 100.17 billion yuan (+44.9%). The total for the indicator for this year until the end of June is 6.2 trillion yuan: commercial services – 24.6%; manufacturing industry – 19.8%; wholesale and retail trading – 16.4%; and mining industry – 4.7%. In particular, investment of this kind in foreign manufacturing industries reached $17.59 billion; a 245.6% growth.

The USD was trading down against the yuan this morning at 6.6870 (-0.0093 or -0.14%).

The ZEW institute published its July assessment of the current economic situation and business sentiment in Germany and the Eurozone on Tuesday. All three indicators came out significantly worse than expected. Meanwhile, June construction permits and foundations lain in the US saw a rise which exceeded that forecasted by the experts. As a result, the dollar rose against all key currencies. In particular, the EUR/USD fell from 1.1080 to 1.1000. Wednesday morning has seen the pair in a 1.1000-1.1020 range, attempting to restore higher. The main news of today is that coming out of the UK (stats on unemployment and average salaries) and Switzerland (ZEW economic expectations index).
 

Alpari

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Chinese trade up

The oil market on Wednesday saw an increase in volatility. Oil dropped in the second half of the day to $45.9 per barrel of Brent; a minimum since the beginning of May. Later on, however, support for the price came from US stats. According to the EIA, oil reserves fell by 2.342 million barrels for the week (expected 2.1 million barrel fall). As a result, oil prices quickly mobilised to $47.5, finishing the day at $47.1. The price on Thursday morning has been rising steadily towards yesterday’s maximum, reaching $47.4.

The US indices yesterday continued to update their all-time maximums and, due to this, the Asian stock markets saw a rise. The Nikkei 225 rose by 0.5%. The ASX Australia was up 0.3%. The Shanghai Composite increased 0.8%, and the Hang Seng was up by 0.7%. Futures for the S&P500 were trading at 2167; close to the closing level of the previous trading day.

The service trading volume in China for the first 5 months of 2016 totalled 2.08 trillion yuan; a YoY increase of 22.7%. This trading of services amounts to 18.5% of China’s domestic trading (previous: 15.3%). The rise in trading reaching almost 20% was in particular in the exports of computer (20.4%) and technical (23.9%) services, in addition to financial, advertising and informational services. Concurrently, there was an impressive rise in imports: 31.9%. The main factor for this growth was tourism: rising from 53.4% to 880.3 billion yuan for the first 5 months of this year. Taking June’s data into account, the service trading volume for the first half of 2016 is around 2.5 trillion yuan.

The USD was trading down against the yuan this morning at 6.6720 (-0.0058 or -0.09%).

The EUR/USD was trading in no particular direction on Wednesday: dropping to 1.0980 and rising to 1.1030, closing the say above the opening price at around 1.1015. Thursday morning has seen the pair rise towards 1.1030. The much-awaited event of the day is the ECB interest rate meeting. Retail sales will also be coming out of the UK and initial unemployment benefit applications will be coming out of the US.
 

Alpari

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Chinese enterprise creation at 9,600 per day

The Baker Hughes oil reserve report showed a rise in drilling rigs last week to 462 from 357 a week earlier. As a result, the price of Brent dropped from $46.5 to $45.2 per barrel, updating a minimum which stood since 11th May. By the end of the day, the quotes had recovered to $45.7. On Monday morning the price of oil has been trading in no particular direction and in a $45.6-$45.9 narrow range.

The US stock markets were trading close to the recently set maximum on Friday and the Asian markets this morning have shown a rise with the Nikkei 225 rising by 0.3%. The ASX Australia was up 0.6%. The Shanghai Composite increased 0.2%, and the Hang Seng was down by 0.2%. Futures for the S&P500 were trading at 2166; 0.1% below the closing level of the previous trading day.

2,619,000 new enterprises were registered in China in the first half of 2016. This number corresponds to an average of 14,000 new enterprises per day. This is a 28.6% rise on the figures from last year. However, if we take into account the businesses that fell into liquidation, the number has fallen 878,200, thereby a 9,600 real rise per day. Around 95% of the new enterprises are in the private sector, highlighting the perseverance of investment amongst the population. By the end of June, the private sector’s share of businesses exceeded 90% for the first time. Foreign capital was also up in comparison with that of last year; rising 14.8% on last year’s figures with a 22,000 rise in registered. Over 80% of the new enterprises are in the service sector, the vast majority of which being small enterprises.

The USD was trading down against the yuan this morning at 6.6778 (-0.0017 or -0.03%).

The G20 meeting on the weekend didn’t give any impetus to markets. The EUR/USD is under pressure on the Asian session, dropping to 1.0950; a minimum since the Brexit result. However, the rate later restored to 1.0975. The IFO is publishing July data for economic expectations, business optimism and its assessment of the current economic situation in Germany today, with a July index for the industrial sector in the US coming out of the Dallas Fed.
 

Alpari

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Yuan set to become third largest world curreency

Due to talk of a growth in reserves and a slowing in the growth of the world economy, the price of oil remains under pressure and dropped to $44.6 from $45.9 per barrel of Brent. Tuesday morning saw a slight rise to $44.9, but this is nothing. The price of oil has therefore returned to the price it was at at the beginning of May, with a significant support sitting close to $43.3. This evening we may see a correction due to the API oil reserve coming out.

The US stock market has dropped slightly from its all-time maximum and the Asian stock markets are trading in different directions this Tuesday morning, with more of them down than up. The Nikkei 225 has fallen by 1.4%. The ASX Australia was down 0.1%. The Shanghai Composite increased 0.6%, and the Hang Seng was up by 1.2%. Futures for the S&P500 were trading at 2164; 0.1% below the closing level of the previous trading day.

The international currency research institute of the People’s University of China has published its report on the internationalisation of the yuan in 2016. The report highlights that a stable Chinese economy means usage of the yuan in transnational account settling, gradual perfection of financial infrastructure for the Chinese currency and a promotion of the “One road, one belt” dogma. The indicator for the internationalisation of the yuan is strengthening and for the past five years it has shot up by over 10 times. Despite fluctuations on Chinese markets and abroad last year, the tendency for internationalisation of the yuan is still positive. According to the report, up to the end of 2015, the quantitative indicator for the range of complex usage of the internationalisation of the yuan stood at 3.6, 43% higher than at the end of 2014, with the indicator increasing by more than 10 times over the past five years. It is expected that the yuan will overtake the Japanese yen and British pound in the next two years to become the third largest world currency after the USD and EUR.

The USD was trading down against the yuan this morning at 6.6754 (-0.0045 or -0.07%).

Since Monday, the USD has lost its position won last week. The EUR/USD yesterday rose from 1.0950 to 1.1000 and the growth on Tuesday morning continued to 1.1020. The DXY dollar index has fallen from 97.55 at the beginning of the week to 96.95 this morning. The US will see stats on housing market prices and sales of new homes today, in addition to business activity and consumer confidence.
 

Alpari

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One third of all trademarks are Chinese

Oil quotes on Wednesday crumbled after EIA statistics came out showing US oil reserves increasing 1.671 million barrels instead of by an expected fall of 2.257 million barrels. As a result, Brent dropped below the significant $43.3 support, returning to April values and then heading back into a narrow range of $43.5-$43.7 where it spent all on Thursday’s Asian session.

Asian stock markets are down. The Nikkei 225 fell by 0.9%. The ASX Australia was down 0.4%. The Shanghai Composite decreased 0.2%, and the Hang Seng was down by 0.3%. Futures for the S&P500 were trading at 2165; 0.2% above the closing level of the previous trading day.

The number of active trade marks in China by the end of June reached 11.223 million, thereby being around a third of the total in the world. In the first half of 2016, the number of applications to register trademarks in China exceeded 1.74 million and this number could hit 3.5 million by the end of the year. China has been the wold leader by number of trademark applications submitted since 2002.

The USD was trading down against the yuan this morning at 6.6622 (-0.0078 or -0.12%).

At the end of their two-day meeting, the US Fed members left the interest rate unchanged as expected. According to the US regulator, the economic risks are down at the moment, but the FOMC will continue to keep an eye on inflation, the global economic situation and financial markets. US inflation is still under the 2% target level due to a fall in the price of energy. The situation with inflation has been changing slightly in the past few months. Members of the committee are convinced that economic activity will grow steadily and the growth in consumer prices will be low, but enough to reach 2%. The market’s first reaction was a short-term strengthening of the dollar and then it slightly weakened. The EURUSD rose quickly to 1.1060 after falling to 1.0960. The pair was trading at around 1.1070 on Thursday morning.
 

Alpari

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Oil continues its fall

The price of oil is continuing to fall. The phase of sales on the commodity market is now stretching into its eighth consecutive session and doesn’t look like stopping. The significant May minimum of around $43.33 was updated yesterday. The morning trades were going lower and this is opening up the chance for a shift to $42. Due today’s decisions from the BoJ in regards to relaxing their monetary policy, oil could continue to drop lower. The season of increased US demand for energy is coming to an end and reserves are starting to increase due to demand remaining low throughout the world. It’s difficult to ignore such data. From a technical analysis point of view, the support levels are now at $42.87 and $40.60.

Gold is up, but movements on it aren’t so positive as they could be. A troy ounce costs $1,337.9 (+0.4%) today. According to data on trader positions, buyers of gold today are 64% against yesterday’s 80%. The market could react to the end of the season for central banks meeting with a fall in demand for this safe asset. However, whilst oil is being sold at the rate it is, gold will continue to gradually rise.

A barrel of Brent today will trade in a range of $42.80-$43.45 range, with the bears’ positions looking more favourable than the bulls’. The sellers have convinced themselves of a continuation of the fall in oil this year. If they manage to push the price down any further then January’s run of a 10-session series of sales will be updated.

The Asian markets today are down. The Nikkei 225 has fallen by 1.0%. The ASX Australia is down 0.3%. The Shanghai Composite has decreased 0.07%, and the Hang Seng is down by 0.8%. Futures for the S&P500 are trading below the closing level of the previous trading day. The markets are concerned by the BoJ’s July decisions in which the land of the rising sun decided to further relax their monetary policy. Asset purchasing is to remain at 80 trillion yen per year. ETF purchases are to be expanded to 6.0 trillion yen per year (previous: 3.3 trillion yen). Dollar credit financing is to grow to $24 billion from its current $12 billion. The interest rate is to be kept at -0.1%, although it was expected to be reduced to -0.2%.

The USD on Friday morning was continuing to fall against the CNY. The fall has been happening for three days in a row. The USD/CNY is now going for 6.6510 ( a fall of 0.0042 or 0.06%). From a technical perspective, the instrument could drop to 6.6448, a July minimum, whilst the market is getting its head around central bank decisions and keeping an eye on oil prices. The EUR/USD is slightly up on Friday morning, with trades being conducted at around 1.1080. Yesterday’s statistics from the US regarding initial unemployment benefits showed a slight rise, but the report’s components show that there’re no real reasons for a worsening of the indicator. The four-week moving average has jumped slightly in the index. Europe is to publish stats on June unemployment today, along with preliminary inflation figures for July. The US is releasing preliminary GDP data for Q2 of 2016. Forecasts reckon that the US economy has expanding 2.6% QoQ against a 1.1% quarterly rise at the beginning of the year.
 

Alpari

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Disappointing US GDP sends dollar plummeting

Last Friday was a consolatory one for the oil market. According to the report from Baker Hughes, the number of active oil drilling rigs rose to 374 (previous: 371). As a result. The last day of July 2016 saw the price of oil fall to $42.5 per barrel of Brent; a minimum since April. It’s likely that this was triggered by a fixing of profit by the bears. By trading close, the price of oil on Friday stood at around $43.3. On Monday morning the price of oil has continued its rise all the way to $43.7. Through this rise, all Thursday’s and Friday’s losses were won back during the Asian session.

At the end of last week, the American market continued to correct, however the first day of August has seen a rise for the markets. The Nikkei 225 has risen by 0.2%. The ASX Australia is up 0.5%. The Shanghai Composite has decreased 1.3%, and the Hang Seng is down by 1.3%. Futures for the S&P500 were trading at 2176; 0.4% above the closing level of the previous trading day.

A large deposit of potassium has been discovered in Qīnghǎi province in the north west of China. It is hoped that the rich reserves will aid the potassium deficit situation. Bigger reserves are expected to be discovered. Currently, 70% of all potassium consumed in China is imported. The largest reserves and producers of potassium belong to Canada, Belarus and Russia who together provide 60% of the market supply.

The USD was trading down against the yuan this morning at 6.6328 (-0.0022 or -0.03%).

A dramatic fall occurred for the dollar on Friday, caused by the disappointing US GDP in Q2 of 2016. The data showed a 1.2% YoY rise, with it expected to be at 2.6%. This massive difference sent the dollar plunging. The EURUSD rose on Friday from 1.1070 to 1.1190 and on Monday it is trading in a 1.1165-1.1180 range. At the start of the American session this evening some business activeness data for the manufacturing sector and inflation stats will be published by the ISM.
 

Alpari

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China pushes to develop petrochemical industry

The price of oil is continuing to revive from its local minimums which were reached on Tuesday. On Thursday, after a fall for Brent to $42.5, the price quickly bounced back and reached $44.3 which is a maximum since 27th July. This evening will see Baker Hughes’ oil drilling rig report for the US published.

After yesterday’s solid growth on the majority of stock markets, this morning sees the Asian markets off in different directions. The Nikkei 225 has fallen by 0.1%. The ASX Australia is up 0.4%. The Shanghai Composite has decreased 0.1%, and the Hang Seng is up by 1.4%. Futures for the S&P500 were trading at 2162; 0.1% above the closing level of the previous trading day.

China must update old and ineffective production capacity, optimise its industry structure and lessen pollution to increase its competitiveness in petrochemical industries. This is according to a directive from the Chinese state council. Excesses in manufacturing capacity are hindering the development of the petrochemical industry, in addition to problems for the environment, the directive notes. The documents outlines that foreign companies will be allowed to take part in mergers within the Chinese petrochemical industry and 7 petrochemical manufacturing bases will be created as one of a set of important steps to optimise the industry’s structure in the country’s coastal regions. It is planned that by 2020, China’s energy expenses per unit of production costing 10,000 yuan will be reduced by 8% from that of 2015 and the level of carbon pollution and spending on water will drop by 10% and 14% correspondingly.

The USD was trading up against the yuan this morning at 6.6454 (+0.0036 or +0.05%).

The EURUSD on Thursday finished down in a 1.1115-1.1155 range. The pair was doing the opposite, though, on Friday morning: strengthening slightly from 1.1125 to 1.1140. We can expect low activity on the currency market throughout the day today until the US releases its data on in employment (forecasted 4.8% fall) and NFP (forecasted to be at 180k).
 

Alpari

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Markets up; oil in pursuit

After over two weeks of oil falling, last week (from 2nd August) saw things turn around. The growth continued on Friday (5th August), albeit without much gusto: Brent nudged up 0.5%. Nevertheless, oil lifted above $44 per barrel (closing price on 5th August: $44.4 per barrel). On Monday morning Brent is continuing its rise, with Brent now sat at $44.4.

Gold prices on Friday lost 1.9%, hitting $1335 per troy ounce. This could be connected to the rise of commodity markets. However, on Monday morning it is again on the rise, albeit weakly, and gold has now reached $1337 per troy ounce.

The Dow 30 increased 1.04% on Friday and the S&P 500 was up 0.86%. Growth in US indices on Friday has given more emphasis to Asian markets on Monday. The Nikkei 225 is up 2.14% and the Chinese indices are up from between 0.3% and 1.0%. The reason for such growth is Chinese balance of trade data. In June the balance rose by 8.7%; from $48.11 billion to $52.30 billion (forecasted rise of $47.6 billion). As such, the world markets are now expecting the Chinese to overcome their economic issues and this important news has reflected positively on the oil market.

The EUR/USD had fallen 0.3% by trade close on Friday to 1.108, However on Monday it has risen slightly to 1.110. The weakening of the dollar is linked to contradictory labour market data from the US. July job creation outside of the agricultural sector in the US exceeded market expectations, but fell from 292k to 255k in comparison with June’s figures. However, the market was expecting a fall to 180k. In Europe today some statistics on German industrial production in June will be out, but there will be no important economic news from the US.
 

Alpari

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Oil market still on the rise

The oil market on Monday continued the growth path that it was on after switching from a falling trend last week. On 8th August, Brent rose 1.7%, breaking the important $45 per barrel level and closing at $45.16. On Tuesday morning, the growth in oil quotes has stopped and traders are fixing profit. The morning of 9th August sees Brent on the IPE for just $44.95, although we’ll see what happens as the day drags on.

Gold prices on 8th August lost 0.3%, hitting $1334.98 per troy ounce. This could be connected to the rise of commodity markets. However, the situation could change throughout the day today and we could see a slight growth.

The Dow 30 decreased 0.08% on Monday and the S&P 500 was down 0.09%. However, futures for the S&P on Tuesday morning are slightly up (+0.03%). The majority of Asian stock markets are on the rise this Tuesday. The Nikkei 225 is up 0.68% and the China A50 is up 0.49%. However, the Hang Seng has fallen 0.2%

Inflation data has come out of China this morning. The July CPI in the country rose 0.2% on that of June, although it was expected to be less at 0.1%. Annual inflation in June was at 1.8%; as expected. The data could be positive enough for the yuan against world currencies, although we expect to see these stats have an effect on the stock markets in the country.

Trading of the EURUSD on Tuesday morning remains practically unchanged on yesterday’s closing price. The euro has lost just 0.07% of its value against the dollar, with a euro going for 1.107 USD. The US and EU didn’t release any important stats yesterday, so currency traders prefer to sell euro and buy dollars in expectance of a worsening state of EU economies on account of Brexit. Today in Europe will see industrial production data and trading balance data for June, including that of Germany and the UK.
 

Alpari

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Oil market review for August, 3 – August, 9: downtrend on the crude market continues

Last week the downtrend on the crude oil market was broken, and crude prices went up. The prices of WTI rose 4% and reached $42.7/bbl. On August, 8, the price of WTI reached its weekly high of $42.81/bbl. However, the next day it failed to remain at that level and plunged 0.25% to $42.7/bbl. The important resistance level is located at $45/bbl. Nevertheless, WTI price did not yet reach this level.

upload_2016-8-10_13-26-50.png

WTI futures price, August, 3 – 9, 2016


The price of Brent crude also rose 4% last week and reached $44.97/bbl. We notice that the spread between the prices of Brent and WTI broadened to $2.27, while earlier it did not exceed $1-1.5. This reflects the high level of volatility on the crude oil market.


We can say that the downtrend of the two previous weeks is likely to be broken. However, Brent failed to remain at its weekly high of $45/bbl. If Brent manages to remain above this level, it would reach the next strong resistance level of $47-48/bbl.


upload_2016-8-10_13-27-3.png

Brent futures price, August, 3 – 9, 2016


Commercial oil stocks in the US rose by 1.67m bbl, while the market expected a decrease of 2.26m bbl. Nevertheless, Baker Hughes reported that the number of active drilling rigs rose only by 7 units last week. The data is ambiguous. However, some media sources reported last week that OPEC is likely to consider the opportunity of freezing of crude production at the levels of early 2016. But the representatives of OPEC did not confirm or deny this news.


We expect the prices of Brent and WTI next week to be in a range of $41-45 bbl.
 

Alpari

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Jul 6, 2015
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Oil stabilising aftern Yellen's say-so

After high volatility last Friday in connection with Fed chief Yellen’s speech, on Monday the price of oil has begun to stabilise. Oil yesterday was trading in a $49.0-$49.5 range per barrel of Brent and during the Asian session the price rose from $49.2 to $49.4. Tonight the API’s oil report will see the light of day.

World stock markets have already won back the losses incurred due to the possible US interest rate rise and the majority of them have returned to growth. Thus were the movements for the majority of Asian stock markets this morning. The Nikkei 225 has fallen by 0.1%. The ASX Australia is up 0.4%. The Shanghai Composite has decreased 0.1%, and the Hang Seng is up by 0.8%. Futures for the S&P500 are trading close to the closing level of the previous trading day at 2,179.

In July 2016, the total profit for leading industrial businesses, whose annual incomes from core business exceed 20 million yuan, was 523 billion yuan; an increase of 11% YoY. The speed in which this figure has risen is 5.9% higher than that of June. These statistics were published by the Chinese state statistical management agency and, according to the agency, the increase in the rate of growth is down to such things as a rise in sales and a fall in the cost of production, a rise in the price of metallurgic production and other key goods, and a rise in profit growth for the car industry.

The USD was trading up 0.55% against the yuan on Monday, and this morning it is slightly down at 6.6775 (-0.0055 or -0.08%).

After the spike of volatility we had last Friday linked to US interest rate expectations, the currency markets are returning to normal. The EUR/USD was trading in a 1.1160-1.1200 range. Data for US personal incomes and expenditure in July didn’t surprise anyone with a growth in both parameters. Tuesday morning sees the pair slightly down from 1.1190 to 1.1170. US housing index stats are to be published today from for June, in addition to consumer confidence data for August.
 

Alpari

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Pact between Russia and Saudi Arabia supports crude prices

Last week the price of WTI remained almost unchanged at $44.84/bbl. On September, 1, the price of crude plunged to its weekly bottom of $43.5/bbl. The resistance level is now located at $46.5/bbl, while $42.96/bbl is a relatively strong support level.

The price of Brent crude rose by 0.7% to $47.33/bbl last week. The spread between the prices of Brent and WTI broadened to almost $2.5, and that means more volatility on the crude oil market.

The level of resistance for Brent is at $49-51/bbl. We believe that if the Brent manages to remain above this level, it is likely to rise to $55/bbl and higher.

Baker Hughes reported that the number of active drilling rigs rose only by 1 unit to 407 rigs last week.

Saudi Arabia and Russia at the G20 summit in China on September, 5 said that they will co-operate in order to stabilize the crude market. According to media sources, the two biggest oil producing countries are likely to agree to the freezing of crude production at current levels. This pact could have an impact on the future OPEC meeting in Algeria, where the oil exporting countries could agree on freezing of oil production. The prices of Brent rose by 1.7% on September, 5 when media sources announced the details of the pact.

We expect the prices of Brent and WTI at the next week at the range of $46-48 bbl.
 

Alpari

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Oil market review for September, 7 - 13: crude oil market not ready for growth

Last week the price of WTI lost 2.5% and went down to $44.96/bbl. On September, 13, the price reached its weekly bottom of $44.96/bbl. The resistance level rose to the price of $47.7/bbl, while the price of $44.9/bbl could be considered as a relatively strong support level.



The price of Brent crude fell by 3% to $47.12/bbl last week. The spread between the prices of Brent and WTI reduced to $2.16, but volatility on the crude oil market is still high.


The level of resistance for Brent is at $48.7/bbl; failing to remain at the previous resistance level of $50/bbl. The crude oil market is not ready for growth.


Baker Hughes reported that the number of active drilling rigs rose by 7 units to 414 rigs last week. However, commercial stocks of oil in the US last week fell by 14.5m bbl, while the market expected an increase in the stocks by 225,000 bbl. The signals coming out of the petroleum market are ambiguous.


The International Energy Agency in its new energy outlook stated that it has downgraded the forecast of demand for crude in 2016 by 0.1m b/d. The agency reported that Kuwait and the Emirates hit their highest output, while Iraq lifted its production. Output from Saudi Arabia has been held at near a record, while Iran reached a post-sanctions’ high. It concludes that the demand for crude oil will not be boosted in 2016.


We expect the price of Brent and WTI next week to be in a range of $47-48 bbl.
 

Alpari

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Price of crude unlikely to rise above $53/bbl

Last week the price of WTI rose 1.7% and reached $50.88/bbl. The expiration date for the futures’ price was October, 24. On October, 19, the price reached its new quarterly high of $51.54/bbl. We forecast that the price is unlikely to fall below the level of $50/bbl unless OPEC’s members again fail to agree at their meeting on November, 30.

The price of Brent crude oil has risen in the recent week by 1.9% to $52.58/bbl, and is unlikely to fall below$50-51/bbl. The spread between the price of Brent and WTI decreased to $1.7 because volatility on the crude oil market is looking to fall.

Baker Hughes reported that the number of active drilling rigs rose by 11 units to 443 rigs last week. OPEC representatives have been expressing different views about the future freeze of oil production. While Saudi Arabia, Venezuela and Russia - who is not a member of OPEC - have agreed to freeze the production of crude, Iraq, Libya and Nigeria object to such a decision. Therefore, the price of crude oil is unlikely to rise above the level of $53/bbl before November, 30. We expect the prices of Brent and WTI next week to be in a range of 51-52.5/bbl.