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Crude rallies - non-farm payrolls eyed

Last updated 9/6/2012 12:26 PM ET (GMT -5) 0 Comments - Add your comment

Oil was firmer in early trade this morning and extended its gains following Mario Draghi’s announcement that the ECB is to launch another bond buying programme. Outright Money Transactions (OMT) is a successor to the Securities Markets Programme which has now been terminated. As expected following a series of leaks, OMT will be unlimited, sterilised, subject to conditions and aimed at sovereign bonds with maturities between one and two years. So although there were no surprises from the ECB, there was a general feeling of relief that the central bank had determined to take action, with Mr Draghi insisting that “the euro is irreversible.” As bond purchases under OMT will be sterilised, it is not the same as quantitative easing, so perhaps today’s rally is overdone, particularly as traders typically “buy the rumour; sell the fact.” But for now oil is holding on to its gains. Traders are looking ahead to tomorrow’s non-farm payroll data and the prospect of further stimulus after the US Fed’s FOMC meeting next week.

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About The Author

David Morrison has worked in financial markets for over 25 years. He joined GFT in February 2009 to deliver commentary and research for derivatives products. Before then David had been instrumental in setting up two spread betting companies, managed trading desks, and implemented and ran successful risk-management strategies.

He has appeared on Bloomberg, Reuters, and Sky TV, and is widely quoted by financial newswires. He has written numerous articles covering economics and trading strategies using fundamental and technical analysis.

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