Oil continues to plunge lower
Update: Make that 5% now. It’s looking like a free fall towards $50 after price breaks below the September 2017 support as highlighted earlier in the day.
Commodities are being beaten down on the day and that is making for some jitters in risk sentiment across markets still. In turn, this is helping to keep bids in the dollar against the major bloc. Metals are not spared from the selloff in commodities as gold is down 0.5% while silver is lower by 1.5% currently.
It’s getting ugly for oil as technically, there isn’t much support until we get near $50 per barrel. This will at least keep Trump happy and in the bigger picture, this poses a bit of an indirect threat to the dollar as well.
With oil prices looking to plunge lower, it will mean that inflation will start to come off as well. That will take away one area in which the Fed sees fitting to hike rates and give reason for the central bank to pause its tightening cycle early next year.
Of course, that takes time to play out but it’ll be a development to watch out for moving forward.