Oil looks to bounce after recent declines; Crypto tumbles

Summary:

• Energy markets bounce as NATGAS soars

• Crypto markets tumble as Bitcoin falls below $6000

• US inflation meets forecasts; False break higher for USD

• Pound traders look through CPI miss to focus on Brexit

• Commodity wrap - Oil, Silver Natural Gas and Sugar

After a prolonged period of declines it seems like longs in the oil markets are finally getting some respite today with strong gains seen across the energy complex. We earlier focused on these markets in our latest market alert (view here) which looked at the recent declines and asked whether the sell-off was overdone. There’s been  an impressive bounce seen in both Oil and Oil.WTI today but their thunder has been stolen somewhat by NATGAS which has spiked higher by an incredible 12%!

Not long before the European close there’s been some heavy selling in the cryptocurrency space with Bitcoin falling back below the $6000 mark. There’s a key support region here from around 5770-6000 and should the most popular crypto market break beneath it then there’s scope for larger declines back to the $3000 level. The losses aren’t confined just to Bitcoin with heavy selling seen elsewhere in nearly all the altcoins.

The most recent inflation data from the US has come in a little on the soft side and done little to help the US dollar extend its recent rally. Specifically, the October CPI Y/Y came in at 2.5%, in line with forecasts and up from the 2.3% previously. However, a closer look reveals some slightly negative points for the buck with the core reading (ex-food and energy) coming in below the 2.2% expected at 2.1%. Looking at the US dollar index the recent trade has been interesting with a clean break above the 97 handle seen on Monday. However, the was a lack of follow through during yesterday’s session and now the market finds itself back at the 97.00 breakout level. This could be significant going forward as a daily close back below 97 would negate this breakout and see it labelled as false with a move back to 95.75 then possible.

The latest inflation figures from the UK have shown a smaller than expected reading with the Consumer Price Index (CPI) for October rising by 2.4% in Y/Y terms. The core reading, which is more widely viewed, increased by 1.9% as expected and while the headline reading remains above the Bank of England’s (BoE) inflation target, this measure isn’t, and overall it appears that price pressures aren’t in danger of accelerating too high anytime soon. What appears to be a major breakthrough in Brexit negotiations could well prove to be a false dawn as PM May’s draft Brexit treaty has been met with widespread criticism. The pound reacted positively when this news broke but any over exuberrance has been kept in check by the several hurdles that still need to be jumped before it can be finalised.

In this week’s commodity wrap we present you 4 markets that look interesting or/and have posted some major price moves: Oil, Silver, Natural Gas, Sugar.