Signs of doubt
EUR/USD is stumbling on the spot today, swaying around the range of 1.17-1.18, the market did not allow to spread pessimism associated with the political problems in Germany, as well as optimism associated with the tax reform. The US is preparing to celebrate Thanksgiving, in this regard, the senators have postponed the discussion of large-scale fiscal stimulation until next week.
The economic calendar is stingy for important events, but the durable orders data, which release is due later today, will tell investors about consumer sentiment and their confidence in the future. The indicator is expected to grow by 0.4% in October, but given the past storms, data may exceed expectations, which will positively affect the US currency, which so needs a support. It will also be useful to look at the forecasts of inflationary expectations from the University of Michigan. Weak data will add to the anxiety stoked by Janet Yellen concerns on inflation, who alarmed the market on Tuesday saying that she is «very uncertain» whether inflation rebound is around the corner. In general, willy-nilly, hopes are again being turned to tax reform, since Federal Reserve officials hint that the effect of natural disasters may not last long.
Supply disruptions and some data on bankruptcies
Oil prices sharply strengthened on Wednesday, in particular, WTI grew by almost 2%, as traders hastened to price in a drop in the flow of Canadian oil in the US, as well as a sharp decline in commercial reserves according to the API.
The Canadian company TransCanada Corp reported that it will reduce supplies to the US by 85% on its Keystone pipeline of 590K barrels per day, which fact could not but please shale producers. The pipeline that connects the Oil sands of Alberta in Canada with refineries in the US was also closed after a spill of 5,000 barrels in South Dakota. Commercial inventories in the US fell by 6.5M barrels according to the API report, but the data should be confirmed by EIA today.
Source: Haynes and Boone
After a short pause in July, oil firms in the US continued to capitulate. In the third quarter, the default on debt was announced by six companies. In October, the largest number of bankruptcies occurred, in particular, the large service company Castex Energy Partners filed for bankruptcy, which debt amounted to 404 million Dollars. This is the biggest bankruptcy for nine months. Nevertheless, compared to last year, when the market left only 64 companies in nine months, this year for the same period only 22 companies retired from the industry.