While some oil bulls continued to push WTI contracts higher
using the good news from Enbridge, the broad market sentiment was
so vulnerable that prices retreated after rising to as high as
103.37 earlier in the day. Weakness in Brent crude was more severe
with prices approaching 110 again. The WTI-Brent spread has
narrowed to -8.4 in European session. Gold price fell along with
others in the commodity sector although uncertain economic outlook
should traditionally be positive for the yellow metal.
Gold had a volatile quarter in 3Q11. While price had surged to a
record high of 1923.7, the sharp selloff had sent price below 1600
after the CME's hikes in margin requirements. A report from the
World Gold Council unveiled that gold demand was robust, rising to
1053.9 metric tons, during the period. The Council expected that
European bar and coin investment will remain strong in the 4th
quarter given the lingering uncertainty in sovereign debt crisis in
The BOE's quarterly inflation report released yesterday signaled
policymakers have turned more pessimistic towards UK's economic
outlook than 3 months ago. The central bank attributed the major
cause of economic weakness to the sovereign crisis in the Eurozone.
The BOE stated that 'implementation of a credible and effective
policy response in the euro area would help to reduce uncertainty
and so support U.K. growth', while 'its absence poses the single
biggest risk to the domestic recovery'. Concerning the EU plan
agreed on October 27, the BOE said that it 'briefly led to some
lessening in the immediate pressures on the most vulnerable euro
area countries'. However, optimistic market sentiment has
'subsequently reversed' as there lacked details about the plan as
well as the political turmoil in Greece.
Household spending in the UK stayed weak. Retail sales dipped
-0.6% m/m in October while the reading in September was revised
down to +0.5%. On annual bases, sales climbed +0.9%, exceeded
market expectations and the downwardly revised +0.3% in September.
Excluding auto fuel, retail sales rose +0.6% and +0.9% respectively
on monthly and annual basis respectively.
In the US, initial jobless claims probably rose +5K to 395K in
the week ended November 12. Moreover, some housing data will be
released with housing starts falling -7.29% to 610K while building
permits rising +1.85% to 605K in October. Philly Fed manufacturing
might have climbed to 10 in November from 8.7 a month ago.