(29 September 2020)DAILY MARKET BRIEF 2:Oil prices are under pressure
In the commodity market, oil prices have declined after gaining on Monday. On larger timeframes, crude prices are moving sideways. Currently, the worries related to demand outweigh hopes for a fresh stimulus. Also, the COVID has killed over 1 million people according to official data, with the number of cases accelerating in Europe and other regions. Both WTI and Brent are down over 0.60%.
Oil prices are under pressure amid oversupply fears as well. Libya’s oil production has surged this week from 100,000 barrels per day to 250,000 bpd. The country’s crude output was under a blockade for months, contributing to an increase in prices. Iranian oil exports have also increased. Elsewhere, Japan reported that oil imports tumbled 26% in August.
As for gold, the metal is bullish ahead of the debate between Trump and Biden. Gold is benefiting from a weakening US dollar, which saw the largest daily drop in a month on Monday. The metal is up 0.12% to $1,884.
In FX, the US dollar is losing ground after hitting two-month highs last week. Investors will be watching the presidential debate and a series of important US economic data to be released this week. So far, the USD Index is down 0.03%, while EUR/USD is up 0.04 to 1.1669. Yesterday, European Central Bank chief Christine Lagarde said that the ECB might consider further stimulus given the increasing number of COVID infections.
The pound has increased against both the euro and the USD ahead of the latest round of Brexit talks, with investors pricing in some cautious hopes that the UK and the EU would reach consensus given that a no-deal divorce would be disastrous for Britain, especially during the worsening pandemic. Also, the Bank of England reiterated that it doesn’t consider negative rates at the moment.
