Markets Retreat on Political Uncertainties, OPEC Fears

Rumors that tomorrow’s OPEC meeting will fail to instigate production cuts sent oil prices broadly lower on Tuesday. U.S. crude was down 25 cents per barrel to $46.83 while Brent prices slumped 28 cents per barrel to $47.96. Both closed up after Monday’s New York session.

The U.S. dollar also pulled back on Tuesday, trading at $1.0606 against the euro as political uncertainty weighed on the currency pair. Eyes are on Italy’s upcoming referendum about constitutional reform which on December 4 which may determine the political future of the country’s prime minister, Matteo Renzi. If a NO vote is confirmed, Prime Minister Renzi has said that he will resign from his post, which could throw the region into economic and political uncertainty.

Still on track for its strongest two-month gain since early 2015, the dollar continued its gains against the yen on Tuesday morning, hitting 112.18 before retreating slightly. The pair is up seven percent on the month.

U.S. stock markets saw the biggest day of declines in a month on Monday, with the banking sector leading the losses for the S&P 500. U.S. stocks have jumped 3 percent since Donald Trump’s presidential victory, and the retreat may be due to profit taking and skepticism of whether Trump will be able to successfully spearhead the infrastructure campaigns he promised.

Sara Patterson
Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.