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MARKET DEVELOPMENT – Crude Oil in Bull Market, Fed Doves Pressure US Dollar

NZD / AUD: Antipodeans are the outperformers in the G10 space the morning with risk sentiment bolstered by words of encouragement regarding a potential trade agreement between China and the US. However, hurdles remain for both currencies with NZD and AUD which have yet to gain a foothold above 0.68 and 0.72 respectively.

USD: Another raft of dovish Fed commentary has seen USD pare its early advances. Fed’s Bostic noted that the December rate hike likely lifted rates close to neutral. Alongside, this Bostic also stated that the Fed needs to take a wait-and-see approach, which had been similar rhetoric from the likes of Powell and Mester. While FOMC minutes are scheduled later today, given the notable shift in language from Fed Chair Powell last week, the minutes may be somewhat outdated, suggesting a somewhat limited reaction in major asset classes.

Crude Oil: Brent and WTI crude futures are now in a bull market having jumped 20% since the December lows. However, to provide a bit of context, prices are still 30% lower than the October peak. That said, yesterday’s drawdown in oil inventories as reported by the API, alongside, OPEC oil production falling to a 6-month low in December have been among the few catalysts to support oil.

Crude Oil Enters Bull Market, Fed Doves Pressure USD - US Market Open

DailyFX Economic Calendar: Wednesday, January 09, 2019 – North American Releases

Crude Oil Enters Bull Market, Fed Doves Pressure USD - US Market Open

DailyFX Webinar Calendar: Wednesday, January 09, 2019

Crude Oil Enters Bull Market, Fed Doves Pressure USD - US Market Open

Five Things Traders are Reading

  1. Short-term Trading Outlook for the S&P 500 and Dow Jones” by Paul Robinson, Market Analyst
  2. Crude Oil Price Boosted by US-China Trade Talk Optimismby Nick Cawley, Market Analyst
  3. Technical Outlook for Dow Jones, DAX 30, Crude Oil, Gold Price & More” by Paul Robinson, Market Analyst
  4. CAD Outlook Dependent on Crucial Bank of Canada Rate Guidance” by Justin McQueen, Market Analyst
  5. EURUSD Price Rise Could Be False Break Higher” by Martin Essex, MSTA, Analyst and Editor

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX