Thursday, November 29, 2012

Crude Oil, Support On US Recovery Hopes

Commodities under pressure in early European trade, with the newswires citing ominous comments from the OECD warning a global recession could follow a failure to avert the US fiscal cliff as the catalyst. S&P 500 stock index futures are pointing lower, hinting more of the same is on tap as Wall Street comes online. The day’s economic data docket may help offset near-term negativity however.

First, preliminary set of November’s German CPI figures is expected to see the headline inflation rate drop to 1.9 percent, the lowest in four months. This may be seen as giving the ECB additional room to ease monetary policy, which bodes well for sentiment considering the recession in the Eurozone represents the most significant headwind presently facing global growth.

Later in the day, US New Home Sales are expected to hit 390,000 in October, marking the highest reading since April 2010. The Fed’s Beige Book survey of regional economic conditions is also on tap. Signs of firming growth in the world’s largest economy are likely to buoy overall risk appetite amid hopes it will be better able to counterbalance sluggish performance in Europe and Asia.

A recovery in sentiment is likely to boost growth-geared crude oil and copper prices, where near-term correlations with share prices remain significant. Meanwhile, gold and silver may find de-facto support as swelling risk appetite dents haven demand for the US Dollar.

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