Today’s Major Headlines

  • WTI Crude Oil touched $88 per barrel yesterday following extensions to Saudi Arabia and Russia’s voluntary production cuts.

  • Equities continue to trade soft as the jump in oil prices pushed yields higher across the board.

  • The US Dollar remains perched above 104.50 as investors await the release of the ISM Services PMI later today.

Oil Markets

Oil prices continued to rise yesterday after Saudi Arabia and Russia extended their voluntary production cuts to December.

The move is seen as a further sign of tight supply in the oil market, which has been supported by strong demand and low inventories.

The jump in oil prices also weighed on equities, as investors worried about the impact of higher energy costs on inflation. The S&P 500 and the Dow Jones Industrial Average both closed lower yesterday.

US Dollar

The US Dollar remained strong yesterday, supported by the rise in oil prices and expectations for continued strong economic growth in the US. The Dollar Index, which measures the value of the US Dollar against a basket of other currencies, rose to a two-week high of 104.50.

ISM Services PMI

The main econmic data point for the week is the ISM Services PMI, which will be released later today. The PMI is a measure of the activity in the US services sector, which accounts for the majority of US economic output.

A strong reading on the ISM Services PMI would support the view that the US economy is growing at a healthy pace. However, a weak reading could weigh on the US Dollar and equities.

Other News

  • The Japanese Yen strengthened against the US Dollar yesterday after Japan’s top currency diplomat – Takeshi Kanda – said that the government is monitoring the currency’s recent weakness with urgency.

  • The Bank of Canada (BoC) is expected to keep interest rates unchanged at its policy meeting today.
    However, the BoC could signal that it is open to cutting rates in the future if economic growth slows down.

Traders’ Takeaways

  • Watch the ISM Services PMI closely for signs of the health of the US economy.

  • Pay attention to the Japanese Yen for signs of intervention from the Japanese government.

  • Be prepared for volatility in the markets as investors digest the latest economic data.

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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