Forex Markets React to Soft Dollar, OPEC Decision Anticipation, and Quirks of COP28
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URUSD retreats despite soft dollar
The rally in US bond markets, and the tumbling US yields weigh on the US dollar. The USDJPY extended its drop, and finds sellers above the 100-DMA, whereas the EURUSD couldn't extend gains above the 1.10 mark as inflation data from some Eurozone countries came sufficiently soft yesterday. Spanish inflation fell more than expected to 3.2%, as German inflation fell more than expected to 2.3% in November. The Eurozone's aggregate inflation will be released after the French and Italian figures this morning, and slowing inflation will certainly give cold feet to the euro bulls above the 1.10 level – even though it's not impossible to see the pair surpass this level due to USD weakness.
Crude oil rebounds before OPEC decision
OPEC is expected to announce an eagerly expected decision regarding its supply strategy today. The barrel of US crude is back to $78pb, and ready to jump above the 200-DMA if Saudi Arabia obtains a joint effort from other members in reducing supply.
Of course, OPEC will do its best to get the oil bulls on its side when it announced its decision today. But when expectations are high, they are harder to satisfy. Therefore, if a post-decision rally fails to send the price of a barrel above the $81pb level, the critical 38.2% Fibonacci support on September to November selloff that should distinguish between the actual bearish trend and bullish consolidation, it could be a better idea to sell the tops.
COP28
70'000 people flew to Dubai this week to talk about how to cut carbon emissions. 70'000 people. Staying where they were would certainly be a first step in gaining credibility on how to cut emissions. And that's not all the absurd in this COP summit. The CEO of the Abu Dhabi National Oil Company will be leading this week's summit. Yes, the CEO of a company that can survive only by keeping carbon emissions where they are. Additionally, the fossil fuel industry has been invited to participate more than any other COP since the gatherings began in 1995. You know, nothing says 'let's save the planet' like a summit led by a big oil CEO.
