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Mixed Market Awaits Data on Oil

Published December 21, 2016
  • USD/CAD erases gains amid higher oil and is seen exchanging hands at 1.3370 – almost unchanged on the day – reversing a spike from daily highs of 1.3389
  • The US docket offers existing home sales data later today, while tomorrow’s Canadian CPI and retail sales data alongside the US GDP figures will provide next direction on USD/CAD
  • The Dow Jones Index set another new record closing at 19,987.63 on Tuesday, just a few points shy of hitting a symbolic 20,000 mark; Wall Street continues to impress investors as the market benefits from the Trump election victory
  • European banks remain under pressure as troubled Italian bank, Monte Dei Paschi, dropped more than 8% this morning; the bank admitted it only had four months of liquidity and struggled to garner offers for their debt to equity swaps
  • Spanish banks also weighed heavily on Madrid’s stock market, as a European Court of Justice ruling on mortgage interest rates may result in the need for Spanish banks to return between $5.2 and $7.3 billion to customers
  • The market awaits data on US crude oil inventories at 10:30 AM for a further assessment on overall demand for oil; WTI and Brent are both up on an anticipated draw down
  • The American Petroleum Institute has already spurred this sentiment in a release yesterday by showing oil inventories fell by 4.1 million barrels by December 16, which was more than the expected 2.4 million barrels and also marked the fourth draw in the last five weeks
  • Further upside in oil prices is being hindered by USD strength, which tends to slow rallies on dollar-denominated commodities like oil

Chart: (1) Oil prices for Q4