US dollar can get some support from oil

Posted 07 December, 2018

The US dollar is generally uncertain, though the price is fluctuating at the sideline on an upcoming release of the US labour market report. The market expects that the report will dispell recent concerns for the US economy and show the significant strengthening of the employment and salary rates. With this scenario, the greenback will lure demand, though the probable upturn is unlikely to be long-lived.

Nevertheless, the US dollar can also get some support in its slow upward attempts from the OPEC+ meeting. The markets have fastened their eyes on the OPEC+ talks that are about to finish on Friday. It is highly probable that the cartel members will manage to agree on the oil production cuts, and there are almost no doubts in such a scenario. At the same time, the main point is the size of the reduction and the lifespan of these measures.

According to the available data, the talks involve a decline in daily output by 1 million bbl. Of this amount, OPEC members will cover 650,000 bbl and the remaining volumes will be provided by cartel's allies. At the same time, Iran, Lybia and Venezuela will probably be excluded from the agreement.

However, this is not exactly what investors are waiting for. In fact, the market requires 1 million bbl reduction and this figure should be covered only by the cartel. As a result, the market participants want to see the reduction of some 1.4 million bbl per day.

Meanwhile, if the course of the events remains the same, oil prices can drop dramatically responding to the OPEC+ decision. In this situation, the greenback will see better demand. However, the US dollar keeps generally depending on the US Federal Reserve position and US state bonds movement.

Previous forecast

10 December, 2018 14:59

← US dollar moves and Italian budget issue in focus of euro

Following last Friday, the US dollar keeps facing selloffs on Monday. At the end of last week, the situation was entailed by a weak labour market report. For now, the US Dollar index hiked to $96.63. The sterling is unstable in view of the upcoming voting in the UK parliament. However, the currency shows more modest changes unlike the euro, which managed to the November peaks at $1.1440, though then it slightly dipped though remains in the black anyway.

US dollar moves and Italian budget issue in focus of euro

Next forecast

06 December, 2018 16:14

Uncertainty prevails in oil market on upcoming OPEC+ meeting →

Uncertainties persist in the oil market ahead of the fateful decision of the OPEC+ members regarding a widely discussed reduction of oil production. The market keeps fluctuating in this context, while prices are highly sensitive to different rumours and speculations. Volatility stays strong in the market on Thursday. Following the recent fruitless attempts to take roots above $63-handle, Brent prices plunged to some $60.16 today. It seems that prices are likely to keep sliding further below $60 handle. The rumours that the cartel committee suggested a 1 million bbl reduction as well as agreed on new measures have been rejected, and even before the market has responded to them.

Uncertainty prevails in oil market on upcoming OPEC+ meeting
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