US futures are trading lower after posting another fruitful week. This is going to be another busy week in terms of economic data which means we can expect more volatility heading our way. The dollar and oil are both trading lower and the stock market may follow the same trend on the open. Most of the gain which we experienced on Friday for crude oil have worn off after the Saudi oil minister put the cold water on hopes of any supply cut in near future.
In terms of economic data for today, we have the Chicago Fed national activity index print due at 08:30 AM ET. Later in the week, all eyes will be focused towards the upcoming GDP reading for the U.S. for the fourth quarter of 2014. The expectations are of course for a slightly better number but if we do have a disappointing number it could slow the sail for the dollar rally. The green back is already under pressure since the Fed statement, but now, the fed officials are trying to maintain the lid on any further upward move which is expected on the back of early rate hike hopes.
Although, there is a strong evidence that most of the dollar strength has picked up since the fed has winded up their QE tents, but the divergence in central bank’s policies around the globe has also fuelled the dollar rally.
Oil price is a major part of the inflation equation and given that we have too much supply on the market, and it will take some time for the extra supply to find a balance. It is difficult to see if the crude price will trade between 60-70 dollar mark. Perhaps, the new norm could be between 40-50 dollar and the central banks have to plug this number in their accounts to get the accurate expectations of inflation and tailor their polices around that to get the inflation where they want. Given that the nuclear deal is on cards between Iran and the U.S, the outlook may actually start looking more fade for any upward move for the oil price because Iran will start pumping serious amount of oil from its oil fields.