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The increased in Crude Oil Inventories was offset by a stronger U.S. Dollar. The Energy Information Administration (EIA) reported that the weekly change in the oil inventories went up to 3.100 million barrels. This was higher from the week prior at 2.412 million barrels. This is expected to translate in a weaker demand for the black gold. The ADP Employment report, on the other hand, showed 125,000 job creation for the month of September. August’s job creation was lower at 93,000. The disappointing figure for the Crude Oil Inventories was further clouded by the 70th anniversary of the founding of the People’s Republic of China on October 01. This will weaken the greenback against the Yuan. China lashes out the United States and the United Kingdom intervention in Hong Kong civil unrest. As the U.S. and China move towards finalizing the phase one trade deal, the Hong Kong protest is making the negotiations further complicated.
A strong ADP employment report further support the longest economic expansion in U.S. history. This is expected to put pressure on the ailing Turkish Lira. A year had passed but the killing of Jamal Khashoggi was still unsolved. The journalist was murdered at the Saudi consulate in Turkey’s financial capital of Istanbul. Evidence on the crime scene were pointing towards Saudi Arabia Crown Prince Mohammad bin Salman. However, the United States is skeptical to condemn its ally despite the request of its another ally, Turkey. This began to affect the U.S.-Turkey relationship. Saudi Arabia is a powerful player in the Middle East and in the production of oil. The United States, on the other hand, heavily relies on Saudi Arabia’s oil exports to keep its economy afloat. Crude Oil Inventories report showed an increase of 688,000 barrels to 3.1 million barrels.
Demand for the single currency is high as the Spanish Employment Change is about to be released. The previous reports show an increase in unemployment, from a negative 4,300 in August to positive 54,400 in September. Currency traders are expecting the report to ease, which will result in a stronger Euro. On the other hand, the demand for the New Zealand Dollar prior to the ANZ Commodity Price Index report month-over-month (MoM) is low. This was following the flat reading for the report in September. A decrease in the index should be taken as positive for the NZD. However, investors and traders should still be cautious in the event of an increase in the Commodity Price Index. As New Zealand establishes its own foreign policy independent of Australia, the country is expected to compromise to gain leverage on negotiation. This is the scenario that analysts were expecting with the EU-NZ trade deal.
All the reports that the Australian government released today had disappointed investors. The Australia Services Purchasing Managers Index (PMI) went up to 52.4, which is a continuation of economic expansion after the country’s economy contracted for the month of August and September with its 49.1 result. The Australian Exports month-over-month (MoM), on the other hand, is showing a negative figure and is taken as negative for the Australian Dollar. The same is true for the Australian Imports month-over-month (MoM) which showed a zero (0) growth for the month of October. The disappointing results came despite a more optimistic relationship between the United States and China. Australia was one (1) of the countries affected between the trade war of the two (2) largest economies in the world. In other news, Fitch ratings agency said the Australian economy will grow 1.7% and is expected to grow slower in 2020 and 2021.