US Crude Oil Sees Gains Despite Dollar Strength as Equities Rise
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Trading 23 August 2011
The mood of cautious optimism appears to still be with us after yesterday's turn-around in fortune for the shares spread betting markets.
The FTSE market is trading up 1.5% this morning with attention turning to the US and Jackson Hole in particular.
There seems to be some hope of a repeat of Ben Bernanke's quantitative easing announcement last year. QE2 sparked a rally that continued well into the first half of this year and the bulls will be hoping for a repeat performance.
QE3 may not be so easy this time around, given the political turmoil due to the proximity of next year's election and the growing dissention among the FOMC members.
The FTSE market seems to be trying to build a base around the psychological 5000 level, with the S&P 500 holding 1,100 support for the time being.
Much to the bears' dismay, the steam that powers the gold rally is far from running out. The yellow brick yesterday surged past the psychologically important level of $1900.0, and even touched on $1912.2 before coming to an end $57.4 higher at $1909.0.
The concerns that appeared to be at the forefront of investors' minds were debt, inflation, unemployment and housing and even the low expectations of additional stimulus powers dragged the buyers into the precious metal. At time of writing though, the bulls seem to be taking a breather as gold is trading down at $1877.5.
US crude oil extended its recent gains, with the equity markets strengthening, and ignored the slight advance in the Dollar which normally puts a ceiling on the energy sector. The events in Libya did however put downward pressure on Brent, with expectations on an increase in oil exports.
On the FX spread betting markets, trading ranges between the Euro and Dollar have been quite tight at the start of the week. The Euro has moved slightly higher this morning though after data showed that China's manufacturing shrank at a slower pace in August against July.
Another reason for the shallow trading ranges is that traders are awaiting Fed chairman Bernanke's speech on Friday in which he will discuss steps to boost the US economy. The pair is trading at $1.4410 this morning and has rebounded of its support level at $1.4373 which may signal further upside.
The Australian Dollar has moved higher against its US counterpart after the Chinese manufacturing data. Although the figures showed August slowed compared to July, they were still seen as better than expected.
The AUD/USD spread betting pair has already risen sharply this morning, trading at $1.0491, and is above its previous support level of $1.0385, which could see the pair move higher today.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'US Crude Oil Sees Gains Despite Dollar Strength as Equities Rise' edited by SD, updated 23-Aug-11
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