The market was briefly surprised by early reports today that oil inventories in the initial survey in the build up crude oil inventories on Wednesday showed a surprise build up of 4.46M barrels. This is certainly a surprise for many traders who had expected a slow draw down in the US as the market continues to slowly improve and demand was expected to increase. This will certainly lead to a revision in the current forecast for Wednesday which is currently positioned at -0.65M barrels, a minor drawdown on inventory reserves.

The real question for oil from a traders perspective is can this take the wind out of the bulls sails so far. In short I think it may be hard as the bullish trend has been strong for some time and the minor pullbacks we have seen look more like profit taking than anything else. Any push down is likely to find very strong support at 45.84 and I would expect this level to hold up in the event of pressure from the markets. Further resistance above the current levels is likely to also be found at the 50.00 a barrel mark.

The kiwi dollar was lacking momentum today as it pushed higher but lacked any real sense of urgency as the market continued to stall in the wake of US dollar movements. For the most part the market refuses to move on the basis that it’s looking to see some hawkish guidance from the Federal Reserve, but still feels held up by the prospect that it could in fact be quite dovish in the wake of things. Regardless of the USD movements, there is some NZD data due out shortly which will make waves and that is the trade balance data which I touched on yesterday which markets are expecting to drop slightly to -338M. Not a large drop by any means, but still a negative figure which will be the first in 5 months if it comes to fruition. If we do see a drop here it could be worth watching the Reserve Bank of New Zealand comments in the future as they may look to justify further rate cutting on the basis of a falling trade balance in an effort to support the economy.

Regardless of the half hearted technical breakout today, it seems like that the bulls are still carrying some momentum though just cautious with the Jackson Hole meeting on. The breakout through resistance today at 0.7311 looked to be making some ground, but the market pulled back as USD pressure spiked. What will be key here is if the trade balance data has the capacity to do be positive and propel the NZD through the current resistance levels. If that was the case I would expect the next level for traders to target at 0.7475.