Asian markets are tracking the losses on the back of rotten commodity sell off which we experienced over in the US. Stockpiles have only way to go when it comes to crude oil and traders just want to have short positions. The official figures from the US have shown that the stock pile build has inflated nearly four times as compared to the market expectations. So much about the rig count index, which has shown that rigs have going offline since the sell off has started for crude two year ago. Over in the US, the price of crude touched two and half years low on the back of the stockpile build.
Commodity Sell Off impacting Asia | Economic data under focus
This has majority impacted the energy sector which has pushed the major indices lower on Wall Street. The precious metal, gold has also tumbled and made another record low since 2010. Traders are extremely confident that the Fed will raise the interest rate coming this December and given the economic data have shown some sign of life recently, the odds are becoming more anchored in favour of a rate hike in December. This will be the first time the Fed will be increasing the interest rates in nearly 10 years. The dollar index has picked up a major steam due to the interest rate expectations and this is also another major reason for the dollar denominated commodities which are facing extreme selling pressure.
Copper and other industrial metals also came under the hammer due to the strength of the dollar. Copper weakness is mainly due to two reasons Fristly, it is the strength of the dollar which is pushing the price lower. Finally, Chinese demand is still not showing consistent sign of any strong demand and as long as we do not see this demand picking up or a major disruption in the supply chain, it is hard to knit a scenario under which you can see much of an upside movement for the metal.
Wall Street posted its worst day since september 28, as investors were digesting the fresh information from several different fed officials who all had one consistent message which was that it is time to end the liquidity tap on cheap money.
In terms of economic calendar, we do have number of events for today. We will kick in Asia where we have the revised industrial production m/m reading due and the forecast is for 0.1%. As for the european session, we have the German preliminary GDP q/q data which is very important piece of information for the president of the ECB. If the president of the European Central Bank, Mr Mario Draghi, wants to unleash more quantitative easing program, he definitely need Germany on board. If the economic data confirmed that the economic situation has strengthen much more than the expectation, it will be extremely troublesome for the president to fight for his case. The forecast is for 0.3% while the previous reading was 0.4%.
Later in the day, we have the US core retail sales, PPI and retail sales m/m data. the forecasts are 0.4%, 0.2% and 0.3% respectively.