20 April, AtoZForex, Lagos – Yesterday the USD dipped, following reports of a slump in new-home construction in the US, which was more than the projected numbers. Sending the GBPUSD sharply higher as we have the UK labor condition report also due today. Before the London open, oil is trading down as production commenced in Kuwait after an end to the oil workers’ strike. Dragging commodity-linked currencies along with it.
Both the Australian and Canadian dollars have pulled back from recent highs reached. The Kuwait oil worker’s strike reduced around 60% of the country’s daily production to around 1.1 million barrels daily. This is one of the key factors that kept oil prices high after the breakdown of negotiations in the Doha OPEC meeting. Besides Kuwait, production disruptions in Iraq, Nigeria, and the North Sea have also contributed to the fall in global output by about 750,000 barrels a day. This is about half the rate at which the total world supply is estimated to be growing. The end to the Kuwait strike will be a major test for oil prices, as we watch to see if the fall is going to be sustained, or traders will choose to buy on dips.
Big day ahead. The UK average earnings report, claimant count change and unemployment rate due for release. While we also have the European Central Bank (ECB) governor’s speech. From the US, the Crude Oil Inventories is due, putting another focus on oil price.
UK labor condition report (8:30 A.M GMT)
The UK average earnings index 3m/y and claimant count change reports are due today, which will give a clear picture of the UK labor condition. It is generally expected to show UK jobless rate unchanged at 5.1% in the quarter to February. While the jobless claims change, is forecast to show that about eleven thousand individuals dropped off the jobseekers’ allowance scheme in March. A potential decline from the previous 18K.
Ahead of the European Central Bank (ECB) conference tomorrow, we have the ECB president Mario Draghi due to deliver a speech at the ECB Generation Euro competition, in Frankfurt. The ECB is actually one of the world apex banks, which has fallen into quite a predictable pattern. The ECB recently expanded its quantitative easing program, which only kicked in on April 1. However, the TLTROs have yet to commence. Hence, giving too little time for the apex bank to access how well the most recent policy measures have fared. We therefore do not expect any change in this month’s policy meeting.
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