Oil prices showed a decline on Tuesday, responding to a sharp deterioration in the prospects for a trade agreement between the US and China after Washington blacklisted some Chinese companies. Donald Trump also changed the tone of his rhetoric regarding negotiations, emphasizing that achieving quick results is unlikely. In turn, some support for the quotes was provided by the ongoing unrest in Iraq and Ecuador, which are likely to adversely affect oil production.
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14.10.2019 - 08.10.2019
Yesterday, the pair NZD/USD rose moderately. However, the instrument failed to consolidate at the new highs, and by the end of the daily session, the New Zealand dollar had lost most of its advantage. The pressure is exerted by sharply worsened prospects for concluding a trade agreement between the United States and China, which threatens to further slow the global economy down. Washington blacklisted some Chinese companies, banning them from working with American companies and accusing them of oppressing China’s Muslim minorities.
The European currency showed a moderate decline against the US dollar on Tuesday, continuing to develop a "bearish" impulse formed the day before. Pressure on the euro was exerted by ambiguous statistics on industrial production in Germany.
At 08:00 (GMT+2), preliminary September data on the volume of manufacturing orders in Japan will be published. The index reflects the volume of new orders in the industry and has been declining since last October, the last time by 37.1%. The continuation of this trend may put pressure on the yen.
At 01:30 (GMT+2), data on Westpac Consumer Sentiment Index in Australia will be published. The indicator captures the level of consumer confidence and is a leading indicator of consumer spending and economic activity. The data are calculated based on a survey of consumers regarding their assessment of economic prospects. The last time the indicator was negative, amounting to −1.7%. Continuation of the trend will put pressure on the Australian currency.
At 22:30 (GMT+2), a weekly report on the amount of oil reserves in the United States from the American Petroleum Institute (API) will be released. Also to the data on oil reserves, the most important in the report, it contains data on the amount of gasoline and distillates in the USA. A reduction in oil reserves traditionally leads to an increase in oil prices, and an increase leads to a decrease. Last time, US oil inventories fell by 5.920 million barrels. Continuation of this trend may support the quotes.
At 19:50 (GMT+2) in Denver, Fed Chairman Jerome Powell will deliver a paper entitled “Data Dependence in an Evolving Economy”. The speeches of the officials of such a high rank traditionally attract the attention of investors, as they can shed light on the further actions of the monetary authorities.
At 14:30 (GMT+2), data on the volume of building permits issued in August will be published in Canada. The monthly indicator records the change in the number of applications issued by the Canadian government for the construction of real estate and is one of the most important indicators of the construction sector. It is predicted that for August, the volume of permits issued will decrease by 2.0% after rising by 3.0% a month earlier. The implementation of forecasts may put pressure on the Canadian dollar.
The USD/CAD pair continues to trade within a sideways trend. Since August, the price has unsuccessfully tested the key resistance level 1.3350 several times, was corrected downwards but later again rose to the level. For two months, the pair has been trading within the range of 200 points. The main catalyst for sideways consolidation is a lack of changes in key macroeconomic indicators in the US and Canada. At the beginning of this month, the rate rushed up again amid favorable statistics on manufacturing orders, the labor market, and US indices.
Yesterday and today, oil prices have strengthened slightly in anticipation of US-China trade negotiations this week.