USD to continue short-term rally
By Arnaud Masset
Positive economic data are expected to continue the greenback’s surprise rally that kicked in yesterday. Today, releases will come for personal income and spending, both expected to have improved in July over June 0.3% and 0.4% respectively. Also today comes US Federal Reserve’s favourite measure of inflation, core personal consumption expenditures, which should have eased further in July at 1.4% year on year. Friday will see July’s Non-Farm Payroll data (180k expected, compared to 205k in June).
The greenback extended gains against all G10 currencies yesterday. The worst performer was the New Zealand dollar, which fell 1.35% with NZD/USD on its way to test its 200-day moving average that currently stands at $0.7130. The Canadian dollar also suffered a small sell-off with USD/CAD climbing as high as 1.2663.
The USD climb will go on today as a fresh batch of key data is due for release
The US dollar received a much-needed fresh boost yesterday amid the release of better-than-expected data from the world’s largest economy. Firstly, the second estimate of Q2 GDP was revised to 3%, up from an initial estimate of 2.6%. Personal consumption edged up to 3.3% quarter-on-quarter (annualised) from 3%.
Crude oil prices to rise
By Yann Quelenn
Hurricane Harvey has yet to boost crude oil prices, but if the US Gulf Coast refinery shutdowns continue for more than a week, they will push up petroleum. Inventories published by the U.S Energy Department declined by 5.932 million barrels during the week ending August 25. This is the ninth consecutive week of decline, and crude oil is now challenging its 6-week low price.
We believe upside pressures on oil are likely. Not only from Harvey, but from seasonal effects. September demand for petroleum is likely to increase with the end of summer, and overproducing oil is definitely not a viable long-term project. At the same time, at the next OPEC meeting in November, we expect no production cuts to be announced.