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Weekly analysis

Oil inventories still high. What will happen with the Crude Oil prices?

 

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Crude Oil prices might fall in the medium term, according to our technical and fundamental analysis. A target in the medium term might be $57 per barrel where is Fibo 61 on the daily chart.
According to a weekly report from General Electric's Baker Hughes unit, the U.S. oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015. That marked the first time since June that drillers added rigs for four consecutive weeks. The figure was well up on the 597 rigs that were active a year earlier as energy companies have boosted spending since mid-2016 when crude prices began recovering from a crash.
Surging U.S. production is offsetting efforts by the Organization of the Petroleum Exporting Countries (OPEC) and some other producers including Russia to curb production by 1.8 million barrels per day (bpd) until the end of 2018.
Washington lifted a 40-year ban on most oil exports in late 2015, reshaping the world’s energy map as U.S. crude was shipped to countries like Switzerland, China, Israel and the United Arab Emirates. China and other Asian nations have become big buyers.

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Sterling rises on Brexit optimism

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The GBP/USD currency pair will rise in the medium term above 1.42, according to our analysts.The Pound is particularly attuned to the issue of a transitional period, which would negate the potential for a Brexit that would see the E.U. and U.K. go their separate ways in March 2019 without a formal agreement.

Sterling was seen jumping higher against a host of major currencies lately, confirming that its fate this year will remain strongly correlated with developments regarding Brexit.

The most important data about the pound sterling this week will be the Consumer Price Index (expected +0.4MoM, +0.3% previous; expected +3% YoY, +3.1% previous), tomorrow, and U.K. retail sales (expected -1% MoM, +1.2% previous; expected +2.6% YoY, +1.5% previous), on Friday.

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European indices are looking unstoppable

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The CAC 40 index rose above 30% in the last year based on good news from Europe. According to the most analysts, the CAC 40 index will continue to grow this year around 15%. Confidence in the euro area continued its advance at the end of 2017, capping what was probably the strongest year for the economy in a decade.
French consumer confidence rose to 105 in December from 103 in November, beating analyst forecasts. European Consumer Confidence Index rose to 116 in December, above the median forecast of 114.8 in a Bloomberg survey and was based on an improvement in the outlook for industry and services. Despite the European Central Bank’s (ECB) negative interest rates and asset purchases worth 2.3 trillion euros ($2.8 trillion) so far, inflation has been slow to stage a convincing return, remaining below the bank’s goal. Mario Draghi, the President of the ECB has said strong cyclical momentum and reduced slack has increased confidence on the inflation outlook. Mario Draghi is made no commitments on what will happen after September.
According to Rebecca O’Keeffe, head of investment at Interactive Investor, european markets continue to make further gains, the global rally demonstrating how investors are embracing all things equity and risk related, basking in the euphoria of synchronous global growth. “Markets are seemingly immune to any possible downside, but the key risk that might ultimately bring markets down is inflation,” she added.

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OPEC tries to increase OIL price

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In our opinion, the Crude Oil will continue to rise in the next period, based on Organization of Petroleum Exporting Countries (OPEC) outlook. OPEC's oil production fell last month, just before the group met in Vienna to extend its output cuts through the end of next year.
The 14 member nations of the OPEC pumped 32.4 million barrels a day in November, down by 133,500 barrels a day compared with October and down 273,000 barrels a day compared with September.
Angola registered the largest cut in production. Its output fell 108,700 barrels a day. Saudi Arabia's production declined 45,400 barrels a day, Venezuela (41,600 barrels a day) and the United Arab Emirates (35,500 barrels a day).

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USA: Will interest rate continue to rise in 2018?

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The US dollar might rise this week based on positive economic data from the USA. The consumer-price index is expected to jump 0.2%. On Wednesday, the Federal Reserve is expected to increase at this week's meeting its benchmark interest rate at 1.5% from 1.25%. The US retail sales are expected to rise 0.5%, instead of 0.2% the previous month.On the other hand, the Swiss National Bank (SNB) might keep its interest rate unchanged at -0.75%. Therefore, there is a high probability that the USD/CHF currency pair rise this week.

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AUD: Will the downtrend continue?

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This week will be of high importance for AUD/USD currency pair. According to the weekly chart, the downtrend might continue in the medium term. The fundamental data from Australia and the U.S. might also reflect a downtrend continuation. The Reserve Bank of Australia (RBA) is expected to keep rates steady at a historical low of 1.5 percent. Australia's current account deficit doubled in the June quarter, blowing out to $9.6 billion. Today’s data are expected to be $8.8 billion. The retail sales will remain unchanged at 0.3%, according to the data. Gross domestic product growth for the quarter is now likely to be 0.7 percent, less than in the previous quarter, 0.8%. According to the expectations, U.S. unemployment rate should remain unchanged at 4.1%. The U.S. is expected to gain 198K in November, fewer than 261K in October.

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What will happen to Gold, based on Jerome Powell’s speech?

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The precious metal has been supported recently due to the bearishness around the U.S. dollar based on Fed's cautious rhetoric when it comes to raising interest rates.
The DXY was down to near a two-month low last week, losing -0.4% on the session and closing up at around 92.80.
Gold prices rose today as the dollar touched a two-month low versus the euro, but gains were limited despite a retreat in Asian equities led by China.
However, we think it’s a high probability this week Gold to fall, as the USD will rise based on tomorrow’s potential dovish statement of Jerome Powell, the next Federal Reserve chairman.

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EUR/USD: Why you should prepare for volatility this week

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This week could be particularly interesting to keep an eye on the most widely traded FX pair. If you have trading positions on EUR/USD, you should focus on FOMC minutes, Wednesday, and on ECB minutes, Thursday.
Today’s Mario Draghi speech might also cause a short-term volatility. Tomorrow, Janet Yellen, Chair of the Federal Reserve, will participate in a panel discussion at the New York University Stern School of Business.Friday. According to most of the analyst, United States Manufacturing PMI is expected to be 55 and will meet expectations.
Our traders consider that EUR/USD pair will rise in the medium term as there are signs of more European economic growth.

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