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Oil price rises in time for Christmas, invest in Yuletide logs…

Oil price rises in time for Christmas, invest in Yuletide logs…

Sterling was subjected to selling in the aftermath of RBS failing the financial stability report. The Pound gradually gained strength against the Dollar during yesterday’s session as the increase in oil prices proved beneficial. The Euro reached an 11-week high with a move of 1.4% versus the Pound.

OPEC has agreed its first reduction in oil production since 2008, with Saudi Arabia shouldering the lion’s share in cuts and agreeing to arch-rival Iran freezing output at pre-sanctions levels. Brent crude futures jumped 8% to more than $50 a barrel. Officials proclaim that the purpose of the series of supply cuts is to drive the price of oil upwards.

The core Personal Consumption Expenditures price index was in line with expectations at 1.7% for October, while there was a stronger than expected release for the Chicago PMI index at 57.6 from the previous 50.6. The November US ADP employment gain was stronger than expected at 216,000 compared with an expected 160,000. However, October’s increases were revised down to 119,000 which offset the headline figure. The combination of firm data and a strong increase in oil prices put strong upward pressure on US bond yields and pushed GBPUSD above the key 1.2500 barrier again.

Eurozone preliminary CPI Inflation was in line with expectations at 0.6% for November from the previous 0.5%, the highest rate for over two years, while the underlying rate was unchanged at 0.8%. There are still expectations that the European Central Bank (ECB) would announce an extension of bond buying at next week’s policy meeting.

Data to watch: 8.55am German Markit Manufacturing PMI (Nov), 9am EUR Markit Manufacturing PMI (Nov), 9.30am UK Markit Manufacturing PMI (Nov). 10am Euro Unemployment Rate. 1.30am US Initial & Continuing Jobless Claims. 2.45pm US Markit Manufacturing PMI (Nov). 3pm ISM Manufacturing PMI, ISM Prices Paid, Construction Spending

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