28/11/16 - Oil Prices Tumble on Output Concerns, USD Retreats 

USD

The dollar and U.S. bond yields fell early this morning during Asia trading hours, after oil prices slid on fears that producer countries meeting this week could fail to agree an output cut.

Brent crude futures last traded at $47.13 per barrel after having fallen by as much as 2.0 percent in early Asian trade, following on from a 3.6 percent fall on Friday as doubts arose over whether the Organization of the Petroleum Exporting Countries would reach a deal later this week.

Prospects of reduced upward pressure on inflation from oil prices, prompted investors to curb expectations for rises in U.S. interest rates, bring down treasury yields and the dollar.

Late Friday figures were released showing the  US services sector continued to expand in November, and new work orders for companies rose at the fastest pace in a year. The Preliminary services purchasing manager's index came in at  54.7, slightly lower than the  54.8 in October. Some firms said that with the election finally over customers  became more willing to spend again.

 

GBP

On Friday  preliminary UK Q3 GDP matched original estimates that have shown growth of 0.5 percent during third quarter of 2016. It was the fifteenth consecutive quarter of positive growth since Q1 2013. On an annualized basis, the growth rate also confirmed the preliminary reading of 2.3 percent, in line with  forecasts. 

The preliminary Q3 GDP estimate  includes data for the whole period after the EU referendum and has been in line with recent trends suggesting a limited impact on the economy after the Brexit vote to date . A 0.7 percent rise in household spending highlighted the extent to which consumers appear to have remained largely unaffected by the Brexit vote

Business investment was estimated to have increased 0.9% in the third quarter, which was slightly stronger than the expected increase of 0.6%. Business investment will be a crucial focus over the next few months as the near-term increase in Bank of England growth projections was based partly on the fact that investment had been lower than  expected. There are still  concerns that Brexit uncertainty will damage capital spending and any downturn for the fourth quarter would increase concerns for the outlook of the UK economy.
 

Key Announcements

14:00 - EUR : ECB President Mario Draghi Speaks