If you were just to look at the where the major currencies are trading relative to yesterday’s US close, you’d think it’s been a pretty quiet day; after all, none of the majors are trading more than 0.3% from the day’s open as of writing. However, that apparent tranquility is masking some big moves (and subsequent reversals) over the last 20 hours.
Crude oil prices are showing signs of breaking out to the upside as U.S. oil production falls for the second month in a row despite the following: expectations for an increase, OPEC record compliance to oil production cuts and because of a harder line on Iran by the Trump Administration.
Before the election, there were dire predictions about a Donald Trump presidency may mean for the US stock market, with some prognosticators calling for a -7% (seven sigma!) drop on the first day. Those grim forecasts appeared on point on election night, when U.S. markets were halted limit down (-5%) at one point overnight.
The UK inflation figures were stronger than anticipated, with headline CPI rising at a 0.6% rate rather than 0.5% that had been widely expected. The impact of Brexit was very clear as a significantly weaker pound caused the price of goods and raw materials purchased by manufacturers to soar. The 3.3% month-over-month jump in PPI input was much stronger than 0.6% expected, but it looks like most of the costs were absorbed by manufacturers as factory gate prices only rose 0.3% on the month.
Crude oil prices are at a critical juncture after the U.S. dollar hit a one-month high against the euro and a 12-year high against the yen as traders looked for safe haven on fears that Greece might default and on worries that the Fed might be closer to raising interest rates.