WTI Oil under extreme pressure

WTI Oil has descended to another fresh 6 year low at $36.40 as concerns intensify over the global supply glut. These growing fears over factors such as an excessive oversupply in the markets and the visible reduction in demand for oil have consistently haunted investor sentiment, consequently affecting any remaining attraction towards oil. The decision from OPEC late last week to leave production levels unchanged dealt a crippling blow to the bulls, and with investor sentiment towards WTI oil currently unsteady, the path may have been set for prices to decline to such levels which have not been seen since the start of 2009 when prices clipped $35.00.

OPEC is willing to leave production unchanged in a bid to regaining market share in the long-term and such a scenario has diminished any hopes over an immediate production cut. WTI remains heavily bearish fundamentally and this catalytic combination of an aggressive oversupply and sluggish demand in the markets has obstructed any opportunity of a recovery in value. WTI Oil is under extreme pressure, vulnerable and open to further losses and this will trickle back down to those currencies that belong to economies which are reliant on oil exports.

From a technical perspective, this heavily bearish commodity may have enough downwards momentum to send prices towards the psychological $35.00 level. Prices currently trade smoothly below the daily 20 SMA and the MACD has also crossed to the downside. There have been consistent lower lows and lower highs which validate the definition of a downtrend.

GBPUSD meanders below 1.518

Sentiment towards the Sterling received another blow during trading on Thursday following the Bank of England’s widely expected decision to keep UK interest rates unchanged for the sixth consecutive calendar year. Even though the GBPUSD recently experienced an aggressive appreciation which has been the result of USD weakness, the pair is still bearish as sentiment towards the Sterling is quite weak.

The GBP continues to be threatened by the Bank of England’s (BoE) clear reluctance to begin raising UK interest rates, while other signs of sluggish economic growth and static inflation are also reducing any pressure on the BoE to act. Investor attraction towards the Sterling continues to be limited and with expectations that UK interest rates may be pushed back beyond next year and more towards early 2017, the Sterling remains vulnerable to more losses in the future.

The GBPUSD is currently under pressure and with concerns lingering over a potential slowdown in economic momentum in the UK economy, mixed with the rising expectations that the Fed may raise US interest rates next week, sellers may be encouraged to send the GBPUSD back down towards its recent lows at 1.49.

USD firms ahead of retail sales

The Dollar managed to gain some ground during trading on Thursday as the instability created from the ECB’s under delivery last week Thursday slightly wore off. This short term weakness in the USD provided an opportunity for devoted bullish investors to reinvest at a reduced price. Investor sentiment towards the Dollar remains very bullish and with most data in November reinforcing the growing optimism around a US interest rate rise in December, the Dollar may likely regain and appreciate once again in the future.

From a technical standpoint this visible decline in the Dollar Index may attract some bearish traders, but the devoted bullish investors will be observing how prices react to the strong 200 daily SMA support. This may provide a foundation for buyers to send prices back towards the milestone 100 psychological levels.

Focusing on today, the main event risk for the USD will be the retail sales and if the results exceed expectations then the Fed may be provided with an additional factor which provides a compelling case as to why US interest rates may likely be raised next week.