Daily Stocks Update: Crude Oil Bottoming Out? – Jan 14, 2016

Daily Stocks Update: Crude Oil Bottoming Out? - Jan 14, 2016

Crude oil was unstoppable in its tumble even as the latest US inventories report indicated a marginal increase of 0.2 million barrels versus the projected 1.9 million rise. WTI crude oil is still looking weak around $30.25/barrel while Brent crude oil actually fell below $30/barrel. USDCAD popped above the 1.4300 major psychological mark onto 1.4375, CADJPY just broke below 82.00, and EURCAD soared to a high of 1.5672.

The US Energy Information Administration predicted that US shale oil output could fall to 8.7 million barrels this year and that prices could actually recover soon. However, this did very little to calm investors’ fears about the future of the oil industry, with experts warning banks that are exposed to US shale oil companies that they might be exposed to the risk of collapse.

Australian dollar shrugs off strong jobs data

In the Asian trading session, Australia printed a stronger than expected employment report for December, indicating a small 0.1K drop in hiring versus the projected 11K decline. To top it off, the previous reading was upgraded to show a 74.9K gain in hiring from the initially reported 71.4K increase. The unemployment rate held steady at 5.8% instead of rising to the estimated 5.9% figure, but this was mostly a result of a drop in the participation rate from 65.3% to 65.1%.

AUDUSD is testing the bottom of its longer-term range around .6950, AUDJPY appears to have found support at 82.00, GBPAUD resumed its drop after a test of the 2.0750 area, and EURAUD is hovering around 1.5600 again.

Pound pairs weakened ahead of BOE statement

UK traders appear to be pricing in expectations of a downbeat BOE monetary policy statement, as the recent slide in oil prices is likely to weigh on the central bank’s inflation outlook. Recall that BOE Governor Carney already pointed out that their weaker inflation forecasts might be enough reason for them to delay any possible rate hike, leading analysts to predict that rates will remain low possibly until the end of this year.

GBPUSD broke below the 1.4400 handle yesterday and is retesting that area today, GBPJPY is trading around 169.85, EURGBP carried on with its upside breakout to .7550, and GBPNZD is testing the resistance at 2.2200. The MPC meeting minutes are also up for release today and a unanimous decision to keep rates on hold might be even more bearish for the pound.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.