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Oil Slips on Weaker Data

  • Oil slips on weaker data
  • Sterling up on manufacturing data
  • NZ employment data disappoints

Oil prices fell 2 to 3 percent yesterday after a report showing OPEC output rose last month. That would normally strengthen the US Dollar, but we have not really seen that. A slump in car sales in America, plus flat lining wages statistics caused the USD to pause for thought. Consumer spending did rise in spite of the poor wages data, so that may be a positive, but the Federal Reserve is going to be wary of considering interest rate hikes if people aren’t earning more. The Sterling – US Dollar rate is above $1.32 and that’s the highest since September 2016. This pair is testing a trend line that goes all the way back to June 2014, so it is a major blockade. Sterling could well top out here, just as it did when it hit this line seven times before.

The other side of that equation is the growth of UK exports as manufacturers gained extra overseas orders and the weakened Pound has to be a factor there. The data was better than forecast and that explains the strength we saw in the Pound yesterday. Tomorrow’s Bank of England (BoE) activity will drive the Pound over the coming 30 hours. Whilst the BoE is expected to leave everything on hold, their thought process and expectations could be the catalysts for a change in the Pound’s value.

We also had Canadian manufacturing data yesterday and the figures were better than forecast. An index reading above 50 denotes growth in the manufacturing sector and the Canadian Purchasing Managers’ Index (PMI) was 55.5 last month; up from 54.7 in June. The Canadian Dollar is looking strong as a result, although the Pound did make some gains yesterday as it recovers from a very low point in the latter part of July.

Overnight The New Zealand Dollar depreciated across the board after a mostly disappointing second quarter jobs report. The unemployment rate did improve marginally to its lowest reading since Q4 2008.

However, annual jobs growth was just 3.1% against predictions of 4.1% growth. That somewhat disappointing NZ employment data has now dampened expectations of any interest rate rise in New Zealand over the next 12 months.


Worrying is like wearing a ski suit the whole year in London just in case it snows.


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