The official weekly crude oil inventories report from the US Energy Information Administration (EIA), released this afternoon, has confounded expectations in a positive way and oil prices have correspondingly surged to their best levels since early July.
As the divergence in monetary policy between the US and Japan began to widen, the U.S dollar/Japanese yen(USD/JPY) curreny pair started its massive bull trend from around the year 2012 which ultimately ended in mid-2015, well before the December 2015 rate increase.
The American Petroleum Institute (API), an industry group, reported a sharper-than-expected 2.1 million barrel rise in U.S. weekly crude stockpiles. As a result, hopes that the official data from the EIA would reveal a 1.3 million decrease – the first decline in two weeks – were dashed.
On the technical front, the Dollar Index is bang in the middle of its 1.5-year consolidation range, holding near its flattening 50-week moving average. From a long-term point of view, the lengthy consolidation here is actually quite bullish given that the prior move was a rally that began in mid-2014 and that the index has been able to hold on to most of those gains.
European stocks have started Tuesday’s session on the front foot after a lacklustre performance on Monday. Sentiment remains upbeat for global equities mainly because of the actions of central banks, rebounding oil prices and the mostly better-than-expected U.S. corporate earnings results.