Oil Steady as Markets Eye US Manufacturing Data

Crude oil has started the new trading week with slight losses, as US crude is trading at $45.85 a barrel in the European session. In economic news, Monday’s key event is US ISM Manufacturing PMI, with the index expected to come in at 50.0 points.

Oil posted gains last week, buoyed by the Federal Reserve policy statement. The statement was surprisingly hawkish and transparent, as the Fed said that a rate hike was a possibility in December, depending on employment and inflation numbers. The markets had essentially written off a move by the Fed before 2016, so the statement caused sharp volatility in the currency markets, with the US dollar showing broad gains after the dust had settled. With the next Fed meeting is mid-December, and the markets will be in alert mode for any further hints about a rate hike. As well, key US numbers will be closely monitored, especially employment and inflation data, as the strength of these numbers in the next several weeks will play a critical role in determining whether the Fed will press the rate trigger in December. Still, traders should keep in mind that the markets sometimes overreact to Fed statements or comments from Fed policymakers, and the central bank could easily continue to wait on the sidelines until 2016.

With the Federal Reserve statement behind us, the markets can once again focus on economic releases. There was much anticipation ahead of the US Advance GDP for the third quarter, which was released on Thursday. As it turned out, this key event didn’t shake up the markets, as the reading of a 1.5% gain was almost identical to the forecast of 1.6%. Still, this figure is much lower than the Q2 Final GDP of 3.9%, pointing to a slowdown in the US economy. Meanwhile, Unemployment Claims beat the estimate for a fourth straight week, coming in at 260 thousand. The estimate stood at 264 thousand. On Friday, US key releases wound up the week on a positive note. Employment Cost Index jumped to 0.6%, pointing to an increase in wages for US workers. The UoM Consumer Sentiment improved to 90.0 points, within expectations.

WTI/USD Fundamentals

Monday (Nov. 2)

• 14:45 US Final Manufacturing PMI. Estimate 54.0 points
• 15:00 US ISM Manufacturing PMI. Estimate 50.0 points
• 15:00 US Construction Spending. Estimate 0.5%
• 15:00 US ISM Manufacturing Prices. Estimate 39.5 points
• 17:00 FOMC Member John Williams Speaks
• 19:00 US Loan Officer Survey

*Key releases are highlighted in bold

*All release times are GMT

WTI/USD for Monday, November 2, 2015

WTI/USD November 2 at 13:10 GMT

WTI/USD 45.85 H: 46.56 L: 45.58

XAU/USD Technical

• WTI/USD was flat in the Asian session and has posted slight losses in European trade.
• 44.30 is providing support.
• 47.04 is a weak resistance line and could be tested in the North American session.

Further levels in both directions:

• Below: 44.30, 42.59 and 39.87
• Above: 47.04, 49.06 and 53.86

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