Today’s insight includes a rate cut in Norway, more struggles for commodity currencies, a speech by Janet Yellen, and a meeting between the leaders of the world’s two largest economies. This is your Morning Market Report for Sept. 24, 2015.
Demand worries overshadowed a drop in crude stocks after the Energy Information Administration (EIA) seemed to suggest refiners going into maintenance and a weakening demand for gasoline helped send the market higher.
The U.S. dollar saw gains after a critical manufacturing report in China signaled the world’s second-largest economy is slowing down. Today’s insight includes a bounce-back for oil prices, economic concerns Down Under, testimony from European Central Bank head Mario Draghi and the world’s reaction to China’s slowing economic growth.
The day after crude oil prices rose almost 5% the dogma of the dollar versus oil inverse relationship has come to a screeching halt ahead of the most exciting FOMC meetings in a decade. As the Fed moves closer to raising interest rates and getting closer to a normalization of interest rate policy the correlation between the dollar and oil is breaking down.
At the time of this writing on Friday, both oil contracts look poised to finish the week lower. Brent is set to close lower for the second straight week, while WTI is about to snap a two-week winning streak. Despite this week’s losses, both contracts remain above their August lows, keeping bullish hopes alive that prices may have bottomed, even if the probability of such scenario appears to have diminished given the lack of further follow-up buying after that late August rally.