Forex Afternoon Wrap key notes for the November 27th
• OPEC meetings under way. Oil outlook still bearish
• Spain GDP q/q 0.5%, in line with estimates; 1.6% y/y
• German unemployment change -14k vs. -1k expectations; unemployment rate 6.6% vs. 6.7% estimates
• ECB’s Constancio speech in Frankfurt
• ECB Draghi’s speech in Finland
• German CPI m/m 0%; CPI y/y 0.6%; HICP m/m 0%; HICP y/y 0.5%
After a volatile and data driven trading session in the US yesterday, the markets opened on a quiet note today as the US is closed for business on account of Thanksgiving holiday. Nonetheless, there was enough data on the table in terms of the Euro single currency and the daylong OPEC meetings.
WTI Crude oil was down -1.8% at the time of writing. Iran Oil minister said that the crude oil prices have a floor around $65 – $70. Qatar oil minister tried to downplay the disconnect between OPEC members by stating that there was ‘harmony’ amongst the OPEC members and does not see any crisis. Venezuela and Algeria have expressed their willingness to cut oil production as Venezuela oil minister said that shale oil was a ‘disaster’ (taking into account how the cheaper shale oil has had a negative impact of WTI Crude). OPEC will be hosting a press conference at 3PM GMT.
The European trading session continued to see speeches from both Draghi and Constancio. The latest comments from Constancio continued to stress on QE as a possibility in Q1 of 2015 and that inflation was very far from the ECB’s target and therefore price stability took precedence over monetary policy.
ECB President Draghi, in his speech once again stressed that closer fiscal, political, banking and capital markets integration was essential to eliminate concerns on the viability of the Euro single currency. He stressed that Euro must be ‘irrevocable’ to ensure the success of the EMU. He was speaking at the University of Helsinki in Finland. Draghi lauded the efforts by the EC president Jean Claude Juncker to present the new stimulus program that was announced yesterday. There were not much of comments in regards to the QE program however. The single currency remained muted during Draghi’s speech.
There were some fundamentals out of Germany starting with the unemployment change which improved better than expected, declining-14k against expectations of -1k decline. The German unemployment rate ticked lower to 6.6% vs. 6.7% expectations and the previous month’s unemployment rate was also revised to 6.6% from 6.7% initially. The inflation data yet again met estimates as the CPI m/m was unchanged while CPI y/y was 0.6% as expected, but below last month’s 0.8% rise. Inflation in the region stagnated, virtually unchanged. Even the HICP, a separate measure of inflation flat lined during the month. EURUSD retraced most of the losses incurred during the day bouncing back from intraday low of 1.2465 to trade at 1.248. With no major news releases scheduled for the rest of the day, the fx markets could be range bound until the Japanese economic data is released early tomorrow.