Will oil get on the global growth bandwagon?

The market is frothy at the thought of a soft landing today after Powell pledged to preserve the strength of the economy yesterday and delivered a half-point cut. Fed projections are for 4.4% unemployment through next year and — presumably — anything higher than that would bring more-aggressive cuts.

That’s a strong put on growth and it’s sent stock markets to record highs.

Oil is up 1.8% today to $72.14 but that comes after touching a one-year low earlier this month.

Copper is up strongly today on global growth optimism and oil could be next. Technically, it’s now testing the bottom of the old range and a close above $72 would be a good sign. The speculative market is also near its most-bearish ever so there is some low-hanging fruit to squeeze.

The x-factor for oil is China. That’s been the main disappointment in demand growth this year and it’s not looking plum at the moment. I think oil would be a big winner if China offered up some real stimulus soon. I’m expecting the PBOC to lower rates this month but the fiscal side will have to get involved to really spring crude.

For now though, there is a decent chance that growth optimism is enough to send the shorts to the exits and bring it above $75.

This article was written by Adam Button at www.forexlive.com.