What to Look out for Today – Stocks and Dollar Down, Oil Sees Boost

As expected the number of U.S. oil rigs declined – causing a sharp rise in the price of Brent crude after a week of its price running on a flat line. A fall in the dollar – the result of markets being once again apprehensive that the Trump administration will be unable to enact any of the promised pro-economic growth policies – further bolstered this effect.

Traders seem to be once again in a risk-off mood, selling off USD – causing its price to drop to a four-month low – after the firing of senior White House advisor Steve Bannon. This was likely a reaction to Bannon representing the right-wing and the party’s ties (ideologically) to the violence in Charlottesville. The perplexing fact is that this should have bolstered the dollar as Bannon was a proponent of economic growth nationally not globally – but this would be a confidence booster in the USD if the Trump administration wasn’t mired with scandal, controversy and instability for the past few weeks.

The JPY on the other hand experienced a boost against the dollar – seeing its highest price since April at 108.58 and at the time of writing this article is at 109.3160.

Due the dollars weakening the EUR also saw a slight boost – trading at 0.8478 after gaining 0.127% yesterday.

Most US stock also reflected this risk-off sentiment regarding all things associated with the USD, The Dow slipped 76.22 points, the S&P 500 lost 0.18% and the Nasdaq fell 5.39 points.

With no significant economic events scheduled for today, we will have to see how the market sentiment will be regarding the USD – although risk-aversion seems to be the way markets will move unless statements are made during the Jackson Hole Summit later this week to reverse this – This is also highly unlikely though, since the heads of the central banks are aware investors are hawking their every word in hopes they will reveal anything that hints towards an interest rate hike as most central banks have kept a dovish rate stance recently.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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