Crude prices tumble further

WTI hits nine-day low

The huge increase in crude oil inventories as at May 17 reported last night by the Energy Information Administration (EIA) was enough to send crude oil prices crashing. The 4.74 million barrels added to stockpiles was well above the near 600,000 analysts had expected and could imply a slackening in demand amid the ongoing uncertainty surrounding the US-China trade negotiations.

WTI fell 2.6% yesterday, closing below the 55-day moving average for the first time since January 17, and has added another 0.5% to those losses today. Crude is now trading at $60.85 with support at the 200-day moving average at $60.22 near, which has held on a closing basis since April 1.

 

WTI Daily Chart

Source: OANDA fxTrade

 

Persistent easing

Bank of Japan Deputy Governor Amamiya trotted out the usual BOJ mantra this morning, saying there is a need to continue easing persistently as it will take time for the Bank to hit its 2% inflation target. He added that the Bank would need to consider the market impact, both at home and abroad, when adjusting rates and would communicate an easing exit appropriately at the time.

USD/JPY showed little reaction to the statement, trading in a tight 110.12-110.35 range during the Asian morning. The FX pair is trading in the red for a second straight day after enjoying a four-day run up to the 100-day moving average at 110.53.

 

Pound still pressured

Brexit headlines have dogged the pound this week as it faces its 14^th down day in the past 15 sessions. This has seen GBP/USD tumble 4.2% from the 1.3175 high struck earlier this month. That would be the worst monthly performance since May last year.

GBP/USD Daily Chart

Source: OANDA fxTrade

 

The next event to monitor will likely be PM May’s meeting with the 1922 Committee, a Conservative Party group made up of all backbench MPs, where widespread rumours suggest she may be asked to step down from her leadership role on June 10. It could come earlier if the Committee is able to change party leadership rules to allow them to force her out immediately. It could get exciting for the pound as we head toward the weekend.

 

German GDP seen unchanged

The first revision to Germany’s Q1 GDP data is not expected to result in any changes, both on a quarterly and annual basis. Surveys suggest growth of 0.4% q/q and 0.6% y/y will remain. We get to see the first of the May indicators with the release of Markit’s manufacturing PMI for Germany, the Euro-zone and the US. The European ones are expected to show a slight improvement with a small deterioration for the US reading.

We also get to see new home sales for April and finish off with a slew of Fed speakers: Kaplan, Daly, Bostic and Barkin are all scheduled to speak at 1700GMT.