JCI Higher Ahead of Consumer Confidence Data

Written by Lukman Otunuga, Research Analyst at FXTM

 Indonesia’s Rupiah stood tall against the Dollar on Wednesday while the JCI concluded higher as market players prepared for the pending consumer confidence report, scheduled to be released on Thursday.

 

Sentiment towards the Indonesian economy is likely to be elevated if a positive consumer confidence report for September signals further signs of economic stability.

 

The Rupiah strengthened against the Dollar on Wednesday with the USDIDR currently trading around 13475 as of writing. With the Dollar potentially receiving a boost if Friday’s NFP exceeds market estimates, Emerging market currencies still remain exposed to downside risks in the short term. Technical traders will be paying close attention to see if the USDIDR is able to keep above 13450 this week.

 

Sterling claws back losses

Sterling received a lifeline on Wednesday, after U.K services unexpectedly accelerated in September; easing some concerns over the health of the economy.

The purchasing manager’s Index for the UK’s services beat market estimates in September, by rising to 53.6 from August’s 53.2. While the rebound in services is encouraging and may support expectations for higher UK interest rates, some fears still linger over the cooldown in manufacturing and contraction in construction. Sentiment towards Sterling still remains fragile despite today’s appreciation, with prices destined to dip lower as Brexit fueled uncertainties, repel investor attraction towards the currency.

Speaking of uncertainty, the lack of progress in the Brexit talks has left market players anxious. This anxiety can be reflected in the Sterling’s overall price action, with the GBPUSD currently trading below 1.3300 as of writing. Taking a look at the currency from a technical perspective, prices are still depressed on the daily charts. Previous support around 1.3300 could transform into a dynamic resistance that results in a further decline towards 1.3150.

Commodity spotlight – WTI Crude

WTI Crude was under noticeable selling pressure this week as investors started to question the sustainability of an oil rally, which lasted for a fair chunk of the third quarter.

Market players who were itching for an opportunity to send the commodity lower, received permission on Tuesday after U.S industry estimates on inventories were a mixed bag. U.S Crude oil inventories declined by 4.08 million barrels last week while the API reported on Tuesday that Gasoline supplies rose by 4.91 million barrels. However, Gasoline supplies rose by 4.91 million barrels and this rekindled some oversupply concerns.

Investors will continue to closely watch for signs on whether OPEC will extend their production cuts beyond the current expiry date of March 2018. While an extension of the deal may support oil prices, this could encourage U.S Shale producers to increase production. As the final trading quarter of 2017 gets underway, Oil markets are likely to be exposed to downside risks, if rising production in the United States obstructs OPEC’s efforts to rebalance the saturated markets.

From a technical standpoint, WTI Crude is under assault by sellers on the daily chart. Sustained weakness below $50 may encourage a further decline towards $49.50 and $48.50, respectively.