Markets were unusually choppy overnight, with the U.S. dollar initially falling against European currencies before recovering heading into the U.S. lunch session…and following the exact opposite path against the commodity dollars.
Crude oil prices are under pressure again as global growth fears seem to outweigh oil production cutbacks. Weak industrial profits in China and the International Monetary potentially lowering its growth forecast.
A weaker currency gives a tangible boost to exports despite the rise of global supply chains blurring the country of origin of many products, according to research published by the International Monetary Fund on Monday.
Gold sharply extended its gains for a second day on Thursday and more than made up the losses suffered earlier in the week. Though the metal was slightly lower at the time of this writing on Friday, it is still holding in the positive territory for the week and thus remains on course to post its second two-week rally since the second week of August.
The U.S. dollar was gaining this morning on a stronger-than-expected GDP report, rising expectations of a Fed rate hike, and easing concerns about global growth. Second quarter GDP was up 3.9%, well ahead of consensus expectations of 3.7%.
While it may not feel like it, crude is in the early phases of a new oil "super cycle." In fact, in the early stages of a super cycle it never feels like it but that is because we are laying the groundwork for supply tightness in the future.