Aussie Up, Oil Down On Glut Fears
The Australian dollar advanced strongly against all the major currencies following the Reserve Bank of Australia’s decision to leave rates on hold last night.
Tuesday, November 3, 2015 - 00:00
The accompanying statement said that the RBA’s board viewed improvements in economic conditions as having firmed in recent months and that the current cash rate of 2.0% was appropriate. The Aussie dollar was also boosted by a general uplift in risk appetite. AUD/USD rose 0.22% to 0.7162, having been well above 0.7200 earlier in the session, while the currency enjoyed gains of more than 0.5% against the euro and the pound.
The price of crude oil was hit yesterday by news of Russian oil output climbing to a post-Soviet record and evidence of contraction in China, which pointed to weaker demand, but the commodity enjoyed a rebound on Tuesday, after China’s President, Xi Jinping, was reported to have said that China could maintain growth of 7% over the next five years. US crude oil futures bounced 1.3% to $46.73. The price of oil has been kept below $50 a barrel by continuing evidence of a supply glut. US supplies continue to swell, though some support came last week after inventory data showed a drawdown in the stockpile at Cushing, Oklahoma. The oil hub at Cushing is the delivery point for WTI crude oil futures and so changes in inventory levels there can have a significant influence on the price of oil futures. The American Petroleum Institute (API) releases its weekly statistical bulletin on Tuesday afternoon, which includes its measure for crude oil stocks, ahead of official inventory data from the Energy Department which is released on Wednesday afternoon.
Tuesday is quiet in terms of macroeconomic news, with September’s factory orders the only major release of the day (due at 11.00 ET, with a 0.9% contraction anticipated following a large decline in the already-released durable goods orders for September). It is another brisk day for corporate earnings, though, with Activision Blizzard ($ATVI), CBS ($CBS), Herbalife ($HLF) and Tesla Motors ($TSLA) among the companies reporting after the close.
With a number of Fed officials set to deliver speeches this week, including Fed Chair Janet Yellen on Wednesday, there was an air of caution to early trading on Wall Street on Tuesday. Shortly after the opening bell in New York, the Dow Jones was down 23 points or 0.13% at 17,805, while the more comprehensive stock market measure of the S&P 500 Index fell 0.24% to 2099.1. These slight declines came after some robust gains on Monday that saw the S&P 500 Index close above 2100 for the first time since August. With such small changes in the levels of the major indices, the chances of finishing up or down were fairly well balanced, based on binary option prices trading on NADEX. The binary option for the Dow Jones to finish up was quoted with a bid/off of 48.1/52.4 at the time of writing.
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