Asian equity markets struggled to follow through on the positive close on Wall Street with most major indices in the red. The Nikkei225 slid 0.75%, Hang Seng 0.27% and China shares eased off 0.24%. There was a marginal bid tone to the US dollar as US 10-year yields edged closer to 3%.
Oil extends yesterday’s gains
Whether it’s because of Hurricane Florence, falling inventories or looming Iran sanctions, oil prices surged yesterday, with WTI having its best up-day since June 26. This morning’s action saw prices consolidate the up-move and push marginally higher to an eight-day high of $70.347.
Yesterday’s Russia’s Energy Ministry said it had potential to raise production by 300,000 barrels per day in the medium term, given the current fragile nature of global oil markets. Meanwhile, the EIA trimmed its US oil production forecasts for 2019, pulling it down to 840,000 barrels per day from 1.02 million barrels per day previously. Oil demand next year is forecast to rise by just 250,000 barrels per day, leaving a bit of a supply overhang, from a US perspective.
Aussie retreats as consumer confidence drops
AUD/USD edged lower in quiet trading after consumer confidence, as measured by Westpac, fell 3.0% in September following a 2.3% drop last month. The pair is still hovering around the 0.71 mark having reached the measured objective of the triangle breakout on August 30.
Beige book to reinforce a strong economy?
Euro-zone industrial production is expected to continue its weak bias in July, expecting negative month-on-month growth for a second consecutive month, according to the latest survey. Forecasts suggest -0.5% m/m and +1.0% y/y. US producer prices for August dominate the US data docket, with estimates showing little or no acceleration from July’s numbers.
Crude oil stocks data from EIA could influence oil prices in the near-term if they confirm the drawdown on inventories displayed by API data last night. A speech from Fed’s Brainard (neutral, voter) is not expected to produce any significant headlines. The Fed’s Beige Book completes the day’s calendar and should generally confirm the robustness of the US economy.