FX market outlookPosted on Tuesday, November 22 2016 at 8:41 am GMT+0000
Oil gains on hopes of OPEC agreement to cut output.
Oil is increasingly in focus ahead of next week’s OPEC meeting in Vienna. Optimism is growing that a deal will be finalized on November 30 to trim output levels and this is helping lift oil prices.
Both international benchmarks, Brent and West Texas Intermediate, gained 1% in the Asian session today. WTI rose to $48.95 a barrel while Brent climbed to $49.61 a barrel.
The yen quickly gave back gains made on news of an earthquake in Japan. But there were no reports of deaths or a tsunami. The Japanese currency only briefly strengthened to push USDJPY down to a low of 110.26 yen before the pair rose to 111.06 in late Asian session trading.
Since its strong post-Trump victory rally, the dollar has been consolidating gains this week. Meanwhile, the US Thanksgiving holiday on Thursday will likely lead to a pause in the rally and give an opportunity to investors for some profit-taking.
The dollar index pulled off a 13 1/2 year-high of 101.48 reached on Friday and last traded at 100.99 in late Asian session. The dollar’s outlook remains positive though due to growing rate hike expectations by the Federal Reserve in December.
The slight easing in the dollar led to gold prices rising to reach a high of $1220.87 an ounce in the Asian session.
The euro held steady against the dollar above the key $1.0600 level. The single currency has moved off a near one-year low of $1.0568 reached on Friday. It hit an Asian session high of $1.0648. News out on the weekend that German Chancellor Angela Merkel was seeking a fourth term, was seen as being euro-positive and is adding support to the currency.
Sterling consolidated gains made against the dollar after jumping over 1% on Monday. The pound edged up slightly in Asia to a high of $1.2511. Data out of the UK later today on CBI Industrial order expectations will be in focus.
Other data due today include Eurozone consumer confidence and US existing home sales.