Oil prices pare gains, moderate optimism across equities

Summary:

• Oil prices trim their previous gains in the aftermath of a slew of OPEC revelations
• European equities keep pushing higher, US futures point to a positive open
• US dollar stays steady, euro and NZ dollar underperform

European Wednesday’s trading began positively, albeit upbeat moods have been unable to push indices much higher. Being in a half of the session one may notice that all major indices are trading higher, and the most standout one is the FTSE100 (UK100) rising 1.05% as of 12:09 pm BST ahead of a voting in the British parliament. The vote is to be about changes to Brexit laws and is to take place at 7:30 pm BST. If the House of Commons votes for it (it means against the government), it would put Theresa May in a tough position. The pound has been barely changed as of yet being trading flat at the time of writing. The SP500 futures are suggesting a positive opening in the US being 0.3% higher on the day.

Meanwhile, we have been offered a lot of comments regarding the upcoming OPEC/non-OPEC gathering in Vienna starting tomorrow. More on this topic we wrote in the daily DE30 post, but since then Iran said that Donald Trump himself is responsible for high oil prices in the market this year. He also argued that the US is destabilising the oil market by fuelling political tensions. Crude price are trading flat as of 12:31 pm BST parring their prior gains.

On the currency front the US dollar is among the best performing currencies ahead of the US session, the Aussie keeps outperforming it though maintaining its gains from the Asian session. During the Asian session we were offered no macroeconomic releases from Australia except the Westpac leading index falling 0.22% mom in May from a 0.19% mom rise a month earlier. Another noteworthy reading is the NZ current account printing a 182 million surplus while a figure of 50 billion had been forecast. On the other hand, the data did not so look when we compare it to GDP momentum as a deficit during the first three months of 2018 increased to 2.8% of GDP from 2.7%, such a rise had been anticipated though.

The South African currency is gaining momentum today even as the May inflation report came in below market expectations. The upward move is mainly driven by the latest remarks offered by the country’s central bank hinting at possible rate hikes once downward pressure on the ZAR does not subside. Notice that since March the USDZAR has surged from 11.62 to 13.90 making the SARB position more uncomfortable as the currency depreciation may soon translate into higher domestic price pressures.

Declines were observed on the cryptocurrency market in the past hours as news of another exchange being hacked dragged down valuations of the major coins. What one may find interesting is the fact that despite broad sell-off the Ethereum price actually managed to hold firm. In Japan self-regulatory body formed by domestic cryptocurrency exchanges will vote on the new set of rules next week while in Cambodia national authorities took another measure to limit the cryptocurrency trading.

Wednesday is all about a weekly DoE release as well as an avalanche of the most prominent central bankers in the world. Therefore, one may expect heightened volatility both on oil as well as major currencies in G10.