There is no escaping the ripple effect that Crude Oil is having on almost every newsworthy currency, commodity, stock and contract theses days. These are the latest effects and this is how you can gain when trading against this declining commodity. Brent crude dropped to a 1.6 percent low yesterday, making it now $46.68 a barrel. This is almost down to a 6 year low. Goldman Sachs do warn that prices would fall further. I predict we could see it as low as $30.00 a barrel.
The sun rising this morning brought with it a new inception of increased Asian stocks and currencies. The offset of the continuing drop in the Crude Oil prices have proved positive for Asian stocks when Chinese economic data was released later yesterday. It looked so good for Asia that even the reigning US dollar slid slightly against the Yen. It is said the drop came about as the job data that broke was very mixed. Even though there was an increase in jobs in the USA in December, there was a decrease in the wages, and posted a decrease being at their lowest in eight years. The only bad news for Asia would be the reports on the Nikkei were 1.7% lower after a three day weekend, which was said to be the cause of the drop.
Also highlighted by the fall of the crude oil prices was that Australian shares, are also down by 0.3%. With the release on Thursday of their Job Report, we will know if Australia is able to recover from their decline yesterday.
The declining oil prices further added concerns as the release of earnings are about to go out for the corporate results. Where some companies are forecast to see some earnings, some energy companies will drop sharply.
Perhaps with all the negativity around the dropping oil prices lately, there may be positive news to come from it. One release in particular could be that of Wednesday’s release to positively attribute to confirm expansion in private consumption in the US.
As for the GBP being stuck in an 18 month low against the US dollar which was presented ahead of the release of UK inflation release. Seems to be that the Bank of England will increase rates. I don’t see the sterling increasing this week.
Trading Tip of the Day:
For me the JPY is still a safe haven for traders, and selecting a Put on the crude oil would be the way to trade for the remainder of today. Australian dollar is also set to increase later this week.
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