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Forex Forum to Share, Discuss, Communicate and Trade Forex • Market Outlook by Capital Street FX
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Re: Market Outlook by Capital Street FX

PostPosted: Thu Sep 29, 2016 7:23 pm
by CSFX.Support
Oil Retreats From 3-week Highs – Chance To Buy Dips

Crude oil soared more than 5% overnight following news that the Organization of the Petroleum Exporting Countries had reached a preliminary accord to reduce production. However, oil prices fell on Thursday as scepticism over the effectiveness of the deal led to profit taking.

Oil jumped to a three-week high after OPEC members surprisingly agreed to curb output by between 200,000 – 700,000 barrels a day. Given the current output at around 33.24 million bpd, the new production celling would be within the range of 32.5-33.0 million bpd. This was the first time since 2008 that the cartel reached an output freeze agreement and could re-establish an output ceiling mechanism abandoned a year ago.

This time, OPEC has chosen to defend market prices instead of market share as the 14-member bloc has done in the last two years, which reflects serious consequences that low crude prices have caused to heavily oil-dependent economies.

However, details of the deal, including the specific quota for each member, cannot be finalized until the formal meeting of OPEC members on November 30th, when OPEC also tends to invite non-OPEC oil producers such as Russia to join discussions over production and supply matters.

Investors are questioning if this agreement could arrest the glut in the already over-supplied market, considering the fact that higher prices will attract U.S shale oil producers to come back into the market.

The U.S. Energy Information Administration has reported unexpected supply declines for four weeks in a row. Official data on Wednesday reported that U.S. crude stocks declined by 1.9 million barrels to 502.7 million barrels in the week to Sept. 23. This comes against expectations that inventories would rebound in the current week, after big drops in previous weeks.

Technical Analysis

WTI once again had to give up its strength at the resistance level of 47.45. In the last month, we have seen the price reverse lower when it has come up against this zone at least 3 times. Looking back at previous cycles, we can see that every pullback from the resistance at 47.45 has resulted in a reversal into a downtrend. However, given current bearish candles with long lower shadows, we can see that buyers are preventing prices from falling deeper. Hence, the slide we are seeing can be considered as a correction and the near-term support could be at 46.50.

Trade suggestion

Buy Limit at 46.50, Stop loss at 46.00, Take profit at 47.45

Re: Market Outlook by Capital Street FX

PostPosted: Fri Sep 30, 2016 6:46 pm
by CSFX.Support
Pound Loses Ground As Dollar Strengthens Amid Market Chaos In Europe

The British Pound dropped on Friday versus the U.S dollar, heading for a lower close for the fifth month in a row even after a chain of data released today came out with better-than-expected results. The Cable has been capped below the 1.30000 threshold as the greenback was boosted amid persistent risk-off trades, caused by the Deutsche bank crisis.

The U.K gross domestic product for the second quarter was revised upwards to 0.7%, from 0.6% in the revised GDP reading published on 26th August. The economy has grown at a positive rate for 14 quarters in a row since Quarter 1 (Jan to Mar) 2013. Commenting on the GDP data the Office for National Statistics stated that “There is very little anecdotal evidence at present to suggest that the referendum has had an impact on gross domestic product (GDP) in Quarter 2 2016”.

The positive revision to the second quarter GDP was due to the fact that the gains in services and investment outweighed losses in net exports. Business investment was 0.5% higher than previously estimated, while services grew 0.6%, instead of 0.5%. Net trade dented overall growth by 0.8% as exports fell 1% and imports gained 1.3%.

Also according to the ONS, the U.K. current-account deficit widened in the second quarter as Britain continued to record heavy outflows of investment income. The gap between money coming in and money going out of the U.K was 28.7 billion pounds ($37 billion), equating to 5.9% of GDP in the April-June period, up from 5.7% in the previous quarter.

Signs of an immediate shock to the economy in the wake of the Brexit vote in late-June have not emerged yet. Still, the British economy is expected to witness a sharp slowdown next year as Brexit saps foreign investment and in turn hits hiring. Consumer spending, the engine of growth in recent years, will be affected as a result.

In the U.S, consumer spending was little changed in August, data from the Commerce Department showed on Friday. Household purchases stood still for the first time since January, following a run of strong gains in previous months, as income grew at the slowest pace since February.

The Federal Reserve’s favorite inflation gauge picked up in August. The measure of inflation based on personal consumption expenditures rose 0.1% from the prior month, in line with expectations. On a yearly basis, the PCE index was up 1 percent.

The core prices measure, which strips out food and fuel, increased 0.2% from July and inched up 1.7 percent from August 2015, remaining under the Fed’s 2 percent goal since 2012.

The dollar still remained higher against other major currencies, up 0.34% at 95.75 compared to a basket of six major currencies, as investors have been flocking into safe-haven assets. Rattled by the Deutsche Bank’ selloff, European markets are trading lower and U.S stocks are also set to open lower.

Investors were still eyeing additional economic reports due later in the day including Consumer Sentiment and Inflation Expectations for September by University of Michigan.

Technical Analysis

GBPUSD has been locked between the support at 1.29000 and the resistance at 1.30600 for two weeks. The pair is under downward pressure of the two moving averages placed above the price action and the downtrend line connecting lower highs that has most recently forced the price to reverse lower yesterday.

Trade suggestion

Sell Stop at 1.29500, Take profit at 1.29000, Stop loss at 1.30000

Re: Market Outlook by Capital Street FX

PostPosted: Mon Oct 03, 2016 5:54 pm
by CSFX.Support
EURUSD Stuck In Thin Range After Friday’s Sharp Surge – Buyers Can Enter

The Euro has been trading sideways to higher in a thin range in early European trading hours on Monday. The pair surged nearly 1% on Friday in the wake of positive signs with regards to inflation growth, and Deutsche Bank’s settlement with the U.S DOJ in a case tied to its sale of mortgage-backed securities before the sub-prime financial crisis.

In a report published last Friday, Eurostat said consumer price inflation (CPI) in the euro zone ticked up by 0.4% in September, in line with forecasts and up from the final reading of a 0.2% advance in August.

Low crude prices continued to drag down inflation. Core CPI, which excludes food, energy, alcohol, and tobacco costs, rose by a seasonally adjusted 0.8% last month, unchanged compared to the previous month’s 0.8% increase but missing expectations for a 0.9% gain.

Europe’s headline CPI has been surging month after month since February but the core reading has remained under 1% for 6 months, which is far below the European central bank’s target of 2%. The ECB is scheduled to hold its next monetary policy meeting on October 20th. In its last meeting in September, the Bank decided to leave its rates and asset-buying program unchanged with no explicit guidance on future moves being indicated or published. Therefore, no changes are expected in the upcoming meeting.

Besides inflation readings, Deutsche Bank’s case has also clouded the EURUSD markets. Markets are still waiting for more news on the German lender after news agency Agence France-Presse reported that Deutsche was nearing a $5.4 billion settlement with the DOJ, well below the originally demanded amount.

The strong bullish momentum from Friday seems to be waning today, resulting in little change in the pair even after a series of EU manufacturing activity data readings were relased earlier today. Markit’s Manufacturing PMI for the euro zone, released earlier today, picked up to 52.6 last month. The survey showed that increasing demand from both within and outside the 28-member bloc boosted factory activity which prompted managers to accelerate hiring.

All sub-indexes namely output, new orders, new export business and employment improved, the report said. Among them, new orders jumped to 53.4 – the highest reading in the past year.

However, the upturn remained uneven among Eurozone’s members. While Germany, Austria and Netherlands recorded the highest growth rates, Spain, Italy and Ireland registered a slower pace of growth. Manufacturing in France and Greece continued to decline.

In the U.S, the Institute of Supply Management is scheduled to report on September manufacturing activity early U.S session today. The result is expected to swing back into expansion territory after unexpectedly falling below 50 in August.

Technical Analysis

EURUSD has been trading sideways in a 20-pip range above the support at 1.12200. The market is generally awash with positive and upbeat sentiment. The RSI index remains above 50. The short-term MA20 is likely to converge with the long-term MA50 from below suggesting further up moves. The price action has broken through both the MA’s from below and is comfortably placed above both MA’s.

Trade suggestion

Buy Stop at 1.12435, Stop loss at 1.12200, Take profit at 1.12700

Re: Market Outlook by Capital Street FX

PostPosted: Tue Oct 04, 2016 5:11 pm
by CSFX.Support
Warmer Autumn Weather Cools Off Natural Gas – Selling Suggested

Natural gas prices have been trading sideways to lower since late September as stocks have continued to build slowly due to cooler Autumn weather, that has reduced demand for air conditioning, thereby reducing power consumption.

The weekly report from the U.S. Energy Information Administration on Thursday reported that inventories held in storage in the U.S. rose less than expected during the week ended September 23rd. The EIA said stockpiles rose by 49 billion cubic feet last week, to 3.6 trillion cubic feet, up 90 billion cubic feet from a year ago and 220 billion cubic feet above the five-year average.

Lower gas prices have discouraged drilling activity and caused production to start falling, while consumption has been hitting record levels. All these factors combined have boosted natural gas higher to reach the highest levels since January 2015. Gas demand for electricity generation has been consistently rising, as cheap gas and climate policy have encouraged power producers to replace old and inefficient coal-fired power plants with more efficient and cleaner gas-fired power plants.

Changing weather conditions have also played a part in altering the supply-demand dynamic. According to official data, temperatures across the most populated areas of the United States have been consistently above normal since the end of May, which has spurred higher than usual demand for air-conditioning usage this summer and caused prices to rise.

The summer demand has now neared an end and autumn is the time when traders usually bet on the strength of the heating market. As a result, warmer-than-average temperatures are likely to lower the heating demand usually witnessed at this time of the year. Monday’s weather updates have reported above-normal temperatures settling in across nearly the entire U.S for the next two weeks. With temperatures expected to be moderately above seasonal norms, it is understandable that traders have been on the sidelines and let prices trade sideways.

In the long run, the drilling downturn has shrunk the earlier supply surplus. Small weekly additions to gas stockpiles have caused the surplus over last year’s levels to decline to just 2.6% more than the stockpiles last year, and the surplus compared to the five-year average to drop to just 6.5% above the 5-year average, as on Sept. 23. All data is based on the U.S. Energy Information Administration report from Thursday.

Meanwhile, the winter of 2016/17 is forecast to be colder than the record warm winter of 2015/16, ensuring higher gas consumption for heating. With more gas-fired power plants scheduled to start up over the next 12 months, natural gas prices are expected to continue rising in the last quarter of 2016.

Technical Analysis

Natural Gas is trapped in a trading range between 2.875 and 2.935 after falling as much as 8.9% from the high at 3.165. Both the short-term and long-term MAs are placed above the price action and casting downward pressure on prices. The market may fall further towards the support zone at the 23.6% retracement level at 2.797 as the market currently remains gripped by bearish sentiment.

Trade suggestion

Sell Stop at 2.875, Stop loss at 2.935, Take profit at 2.797

Re: Market Outlook by Capital Street FX

PostPosted: Wed Oct 05, 2016 6:54 pm
by CSFX.Support
Oil In A Historic Rally As Supply Side Dominates – Can Prices Breach One-Year Highs?

Oil prices rose on Wednesday, prolonging their rally to a sixth consecutive trading day on the back of OPEC’s decision to snap output and falling U.S crude oil stocks. The Hurricane Matthew, which hit Haiti and Cuba on Tuesday and is now heading towards the U.S east coast, has wiped out the effect of a strengthening U.S dollar on oil prices.

U.S crude stockpiles are likely to record the fifth straight week of declines, after the weekly report from the American Petroleum Institute (API) late on Tuesday showed that U.S. inventories dropped by 7.6 million barrels. The U.S. government’s Energy Information Administration (EIA) will report official stockpile numbers later today, which are forecast to indicate an increase following weeks of drawdowns.

Venezuelan Oil Minister Eulogio Del Pino, in an e-mailed statement Tuesday, stated that an agreement to cap output among OPEC and non-OPEC oil producers could slash global supply by 1.2 million barrels a day. According to Minister Del Pino, besides the total amount of 700,000 bpd trimmed by OPEC’s members (the maximum agreed amount under the accord worked out last week in Algiers), non-OPEC states might reduce production by another 500,000 bpd. The deal could consequently boost oil prices by $10 to $15 a barrel above the average September price, he said.

As reported by a Bloomberg survey, OPEC output was at a record of 33.75 million bpd in September, up 170,000 bad compared to the previous month. The increase stemmed from the resumption of supplies from Libya and Nigeria, along with a ramp up in production from Iran.

The Iranian State news agency Islamic Republic News Agency reported on Sunday that Iran plans to increase exports to 2.35 million bpd in coming months from about 2.2 million bpd currently. The country aims to raise output to pre-sanction levels of 4 million bpd to regain market share. But market analysts said that in order to boost export capacity to 4 million bpd from the current level of nearly 3.7 million bpd, Iran would need more assistance in the form of foreign investment into its production infrastructure.

In the next formal meeting of OPEC members in November, non-OPEC oil producers such as Russia and Azerbaijan have also been invited to discuss output curbs. Russia, the world’s largest energy exporter, is widely expected to coordinate a meeting with Saudi Arabia, some time this month, to discuss oil production.

As stated by the U.S. National Hurricane Center, Hurricane Matthew is heading for the U.S. and may hit Florida’s Atlantic coast on Thursday/Friday. The storm is likely to reach the New York Harbor – the delivery point for NYMEX contracts, and may disrupt fuel shipments.

OIL Technical Analysis

After a period of time trading around the 23.6% level at 46.73, Brent crude sky-rocketed to move past both the moving averages, the psychological $50 mark, and a major resistance level at 51.45. The commodity is heading northwards to the highest levels seen since October 2015. The high at 52.82 recorded in June is the highest the market has traded since October 2015 and is a critical mark for the market, in its attempt to create a serious breakout for the medium/long term. The stochastic chart is currently indicating that the Brent market has stepped into the overbought zone. It shall be interesting to monitor the price action to evaluate whether the market can successfully aim for and break through the near term target at 52.82.

Trade suggestion

Buy Stop at 51.85, take profit at 52.82, stop loss at 51.00

Re: Market Outlook by Capital Street FX

PostPosted: Thu Oct 06, 2016 7:54 pm
by CSFX.Support
Copper Sells Off Along With Other Metals – Chinese Support Missing

Copper continued to trade lower on Thursday, heading towards a lower finish for every trading session in the week thus far. Upbeat data from the U.S. services sector boosted the dollar, while holidays in China squeezed liquidity and trading volume in the market.

Copper prices have lost nearly 3% since the start of this week amid thin volume as Chinese markets are closed. The absence of Chinese traders due to the Golden Week holiday left the industrial metal market vulnerable to currency moves. As a result, dollar-denominated commodities including copper have been weighed down by a stronger dollar.

The U.S dollar held on to its strength as expectations over a rate hike this December are getting stronger after a spate of positive reports released recently. Further supporting the case for a rate hike is the rally in oil that started since the informal meeting between OPEC members which brought about an agreement on an output ceiling. A rise in oil prices is expected to help the Federal Reserve to partly solve its concern over U.S inflation, as higher energy prices bring about a trickle down effect through higher prices across the economy.

The Fed delayed its plans on raising rates in September, considering an economy that was growing unevenly, and low consumer prices. The central bank does not expect the personal consumption expenditure index (the bank’s favorite gauge for inflation) to hit the 2% target until 2018. However, given a rise in oil prices that will boost general costs across the economy, U.S inflation is forecast to reach 2.3% next year, the IMF said.

Markets have already turned their attention to the monthly U.S. payrolls report on Friday. The median forecast from economists is calling for an increase of 175,000 in the number of new jobs created in September. Strong jobs data is considered a sign of a strengthening economy, and will cement the case for a rate increase, especially after a spate of positive reports released recently.

One more factor contributing to the strength of the greenback is that U.S stocks ticked lower today. Perceived as a safe haven asset, investors has been flocking into the currency as cautiousness ahead of Friday’s jobs data is holding investment off risky assets.

The general strength in the US dollar coupled with across the board selling in metals including gold and silver has brought about significant weakness in the Copper market. This trend is expected to continue should the NFP data deliver a strong reading tomorrow as rising interest rates are expected to throttle the run-away demand for commodities by increasing the costs of borrowing for industrial and infrastructural projects which are a major source of industrial demand for base metals such as Copper.

COPPER Technical Analysis

Copper has fallen back into the congested trading range that has contained prices during mid-late September. However, the decisive down moves seen recently suggest that prices could break out of this range soon. The support at the 50.0% Fibonacci retracement level looks likely to be retested. As we are close to the weekend and the Chinese market is coming back next week, it is not certain that the price could decisively breach this level. The RSI is also nearing the oversold zone and therefore the market could witness a period of quiet despite the fact that both MA’s are currently placed above the price action.

Trade suggestion

Sell Stop at 2.1440, Take profit at 2.1320, Stop loss at 2.1580

Re: Market Outlook by Capital Street FX

PostPosted: Fri Oct 07, 2016 6:56 pm
by CSFX.Support
Supported by Crashing GBP, FTSE Stable Above 7000.00 – Traders May Consider Buying

The U.K’s FTSE 100 swung between gains and losses in early European trading hours as the Sterling remained weak after a flash crash in early Asian trade. In a rather odd turn of events, a plunge in the British Pound has supported the FTSE in staying above the 7000.00 level since Tuesday.

The Cable was in a freefall at the start of the Asian session. Fears over potentially tough negotiations between the U.K and the European Union on the departure of the UK from the EU, triggered the selloff as automated sell stop orders were hit in a thin market. Sterling consequently plunged to around $1.20000 before bouncing back to around $1.24771 from where the currency again reversed lower and resumed its move downwards.

A weak pound is typically considered to be beneficial to the FTSE 100 index as many of its constituents generate a large part of their revenues abroad. A fall in the value of the pound against other major currencies means overseas revenues are worth more when they are converted back into sterling.

With most of their revenues generated in U.S dollars, mining companies were among the biggest gainers on the London Stock Exchange, on Friday. At the time of writing, Anglo American rose 2.76%, BHP Billiton PLC added 2.8%, and Rio Tinto PLC gained 2.02%. Also leading the way higher in London, Glencore Plc added 2.33%, gold miner Randgold Resources climbed 2.9% while shares of Mexico-based precious metals mining company Fresnillo PLC jumped 2.79%.

HSBC Holdings PLC also helped the FTSE higher with shares putting on 2.35%. Most of the HSBC group’s business is located outside the U.K. With a major part of its operations also based in the U.S, the bank stands to benefit from a financial environment of rising interest rates in the US.

While exporters have benefited from the fall in sterling, importers’ stocks fell off as their costs will be burdened by the exchange rate. EasyJet shares lost 4.71% so far, extending its losses from Thursday’s session when the stock was down by 6.9%. The airline said on Thursday that its full-year profit would drop as much as 29% due to terrorist attacks that slowed bookings and a plunging Sterling. Shares of International Consolidated Airlines Group PLC, parent of British Airways, also fell 3.0%.

Markets are now focusing on the monthly U.S Payrolls Data which will be released later today. Data on the number of new jobs added, the unemployment rate and average hourly earnings are considered as one of the keys to assess the possibility of a Fed interest rate hike at the end of this year. A strong report will boost the U.S dollar and further dampen the Sterling which will in turn support the FTSE index.

Technicals Analysis

Since the day the index surpassed the 7000.00 threshold, FTSE has traded in a thin range between this major level, which has turned into a firm support, and the resistance around 7122.00. Recent swings in the price have prevented the market back from entering the overbought range as two way trading has helped stabilize indicators. The two MAs are still placed below the price action, thereby consolidating the up moves.

Trade suggestion

Buy Stop at 7070.00, Stop loss at 6990.00, take profit at 7120.00

Re: Market Outlook by Capital Street FX

PostPosted: Mon Oct 10, 2016 7:49 pm
by CSFX.Support
Natural Gas Corrects After Last Week’s Powerful Rally – Whats Next?

Natural gas tumbled on Monday on profit taking by traders, after NG reached the highest levels since June 2015. Supported by news from the demand side, natural gas closed higher in every single session last week and rallied over 12%.

Bullish sentiment was partly buoyed by weather forecasts that have predicted unseasonably warm weather in most parts of the U.S from October 12th to 21st, which is anticipated to increase air-conditioning usage and boost natural gas demand for power generation as a result.

The U.S Energy Information Administration on Thursday reported that net supplies of the commodity added 80 billion cubic feet (bcf) for the week ended September 30th, topping analysts’ forecasts for a rise of 69 bcf. Total natural gas stocks in storage rose to 3.68 trillion cubic feet (Tcf), up 74 bcf from a year ago and 205 bcf above the five-year average.

Another possible factor behind the recent rise rise in natural gas can be found in the report from the World Energy Council which has forecast that global per capita demand for energy would continue rising and peak in 2030. The findings are part of a larger report on energy production and consumption, which was released ahead of the 23rd World Energy Congress in Istanbul. The report predicts that technological innovation and government policies will have a significant impact on the demand for energy including transport fuels, heating and electricity.

In a separate report by the U.S EIA, natural gas production and consumption in the U.S were reported to have increased in 2015. According to the EIA’s 2015 Natural Gas Annual Report, the market for natural gas continues to grow as the U.S. currently produces and consumes more gas than ever before.

Domestic production reached 27.1 Tcf, a 4.5 percent increase above 2014 levels, while total demand increased 2.8 percent to 25.1 Tcf in 2015. Net imports also continued their steady downward trend as higher imports were offset by higher exports, the report said.

Another factor contributing to the short term pull-back in natural gas today can be attributed to Hurricane Matthew. The category-1 hurricane had been expected to cause massive disruptions to the areas under its coverage with potential effects on Natural Gas production, supply and transportation, helping push natural gas futures up on Friday, before the hurricane made landfall in the US, over the weekend. The hurricane did cause significant power outages which reduced demand by power plants for NG. However, the damage caused was significantly lower than expected and the supply side seems to bee unaffected for the most part. The markets have subsequently cooled off somewhat.

Natural Gas Technical Analysis

As can be observed from the daily chart, natural gas prices pulled back after failing to break out of the 38.2% retracement on Friday. Bullish sentiment that fueled the commodity for five trading days in a row pushed the market into the overbought zone and sellers stepped in to cool the market, as indicated in the stochastic chart. The %D line and the %K lines have caught up with each other and whether the market corrects much further from here or continues the up-move after a brief correction remains to be seen. With the two MAs placed below the price action, currently prices are expected to re-attempt a test of the 38.2% resistance at the 3.210 level.

Trade suggestion

Buy Stop at 3.210, Take profit at 3.330, Stop loss at 3.000

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Re: Market Outlook by Capital Street FX

PostPosted: Tue Oct 11, 2016 6:31 pm
by CSFX.Support
FTSE100 to Set a New Record – Buying Looks Attractive As Pound Continues To Weaken

U.K stocks swing between gains and losses on Tuesday morning as multinationals continued to benefit from a continuing slide in the pound, but energy companies were weighed down by lower oil prices.

The British Pound extended its slide versus the U.S dollar for the fourth consecutive trading day amidst concerns over the potentially tough negotiation between the U.K and the European Union regarding the UK’s exit from the single market. According to Treasury documents, which were leaked to The Times, Britain will lose up to £66 billion a year if it goes for a hard Brexit.

The cost of leaving the single market and the EU customs union, and to switch to World Trade Organization (WTO) rules will be between £38bn and £66bn per year after 15 years, the documents said. The country’s GDP is also forecast to fall by as much as 9.5% compared to the GDP numbers the UK economy would register, were it to remain in the EU. This projection is based on the scenario where Britain leaves the EU without a successor arrangement.

GBPUSD broke through the $1.23000 threshold today and has played a critical role in cheering most of the FTSE 100’s constituents as these companies generate the bulk of their revenues overseas.

Among top movers, fashion brand Burberry Group PLC added 2.10%, reveling in the positive sentiment towards European luxury brands, after French luxury giant LVMH reported that its nine-month revenue rose by 4% compared with the same period last year.

Other retailers including Travis Perkins PLC and Next PLC also witnessed a rise. Shares of Travis Perkins PLC – the builders’ merchant and home improvement company – gained 2.24% after its “outperform” rating was maintained by Credit Suisse Group AG and JPMorgan Chase & Co. Meanwhile, Leicester-based apparel and accessories seller Next PLC topped the market – jumping 3.64%.

Hospitality and hotel group Whitbread PLC added to the upside, rising 2.73%.

On the downside, Informa PLC led the list of worst performers. Shares of the publishing and events company dropped around 8% due to the dilution effect of the admission of nil-paid rights on the stock. The rights were tendered due to the acquisition of U.S based Penton Information Services.

With a decrease of 3.34%, insurance, and banking group Old Mutual Wealth became the runner-up on the list of losers. Old Mutual Wealth reported net client cash flows fall in the third quarter by 0.9 billion pounds ($1.12 billion). Cash flow fell from 2.3 billion pounds a year earlier, due to pension reforms that prompted clients to withdraw cash.

Energy stocks drifted lower as oil ticked down after the International Energy Agency, in its monthly report, said that OPEC’s total crude production rose by 160,000 barrels per day (bpd) to a record 33.64 million bpd in September. This implies that OPEC needs to slash its current output by between 640,000 and 1.14 m bpd, to reach the ceiling range agreed by the cartel in Algiers which is from 32.5 million to 33 million bpd.

Oil major BP PLC inched 0.18% lower while Royal Dutch Shell pared earlier gains as oil prices headed lower.

FTSE 100 Technical Analysis

FTSE 100 retested the record high logged last week at 7126.95. The steady rally, which has continued since June 27th, has pushed the market into the overbought zone, as indicated by the RSI chart. The bullish momentum seems to be maintaining its strength with a large divergence between +DI and –DI line created in the ADX indicator window. The Index is expected to attempt creation of new all-time highs.

Trade suggestion

Buy Stop at 7130.00, Take profit at 7150.00, Stop loss at 7110.00

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Re: Market Outlook by Capital Street FX

PostPosted: Wed Oct 12, 2016 7:54 pm
by CSFX.Support
OPEC Output Report Dilutes Prospects of A Production Deal – Powerful Opportunity For Sellers

WTI crude oil plunged on Wednesday, extending losses after hitting six month highs at around $51.58 per barrel recorded on Monday. Crude prices plummeted after the OPEC published its production data for September. On top of the fact that the cartel’s oil output last month reached eight-year highs, the report sapped investor confidence in a potential production cut/freeze deal by reporting data that conflicts with information provided by individual member countries.

While some members such as Saudi Arabia, Iraq and Venezuela said they pumped more oil last month than what has been reported, Nigeria said its production was lower and Iran declined to report its numbers. Markets are showing concerns over the possibility of any real agreement on a production ceiling, and the details of the specific quota for each member, which will be discussed next month.

The question is how can OPEC reach a consensus on how much each country should pump if the cartel cannot accurately estimate the production of each member?

Trade suggestion
Sell Stop at 49.95, take profit at 49.10, stop loss at 50.20

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