• UK industrial production should capture attention before noon
  • Canadian housing data could once again shake the Loonie
  • DoE report might influence oil prices, risks seem to uneven though

Oil prices have been among the best performing commodities of late and this pattern has a chance to continue once today’s DoE report confirms the latest API numbers. On top of that there will be a reading on UK industrial output as well as the housing data from the Canadian economy. That said, one may suspect that the CAD could be a bit more volatile currency within the whole G10 basket.

9:30 am BST – UK industrial production: After the GBPUSD failed to break above a 1.36 handle the pair came back to the lower levels. One of the reasons was strength of the US dollar while the domestic that coming from the UK economy has been mixed recently. Even as the industrial sector is not the paramount one for the UK (it accounts for much less compared to the services sector) it could revive some hopes that the fourth quarter of the last year could have been a little bit stronger than the prior one. The market’s consensus points to a 0.4% and 1.8% for mom and yoy terms respectively. Along with some industrial prints we will also get readings on construction output and trade balance for November.

1:30 pm BST – Canadian building permits: The USDCAD bounced back ultimately during the yesterday’s session which could herald a larger move to the upside. On the other hand rises might be contained as oil continues rising. Nevertheless one needs to highlight that the interest rate market has already priced in a next rate hike in Canada which may take place as soon as next week (almost 90% probability for that scenario). Having said that we could assume that each data might be important for the Canadian dollar at this stage as it depends on the two opposite factors mentioned above. The street’s call indicates a 0.3% mom decrease in terms of building permits for November.

3:30 pm BST – DoE report on oil inventories: The oil market has become one of the hottest across the commodity block mainly on the back of continued increases which began in mid-December. Even as we are already entering a period when oil stockpiles tend to rebound the yesterday’s API release showed something completely different. According to the American Petroleum Institute crude inventories tumble more than 11 million barrels. As a result WTI and Brent soared to their three-year highs on Tuesday despite healthy rises of gasoline and distillate stocks. Moreover, the EIA updated its crude forecasts lifting projected demand growth. It expects that world demand this year to grow by an additional 100kbpd which could shore up oil prices. Notice that the consensus suggests a 3.9 million barrels decline in crude stocks but market participants seem to count on a much more deeper decrease when compared to the API’s report. To sum up, one may suspect that oil prices might find themselves under some short-term downward pressure once inventories fall much less.

Central bank speakers scheduled for today:

  • 3:00 pm BST – FED’s Evans
  • 3:10 pm BST – FED’s Kaplan
  • 6:30 pm BST – FED’s Bullard

link do file download linkWTI (OIL.WTI on xStation5) at the highest level for more than 4 years. A possible pullback toward $62 may emerge before long. Source: xStation5