Oil intermarket: DXY and oil highly correlated

Oil prices have collapsed today  amid doubts over OPEC's proposed output cut, after Iraq signaled it wants to be excluded from the pact.

WTI was capped at $51.00 over the past number of trading sessions since last week and has made a fresh low of $49.73 today, penetrating the late May highs and moving into a string support area for the black gold. The 20 dma at 49.84 is located within this vicinity as well ahead of 9th Oct lows at $49.55.

The move comes as Iraqi oil officials said on the weekend that they wouldn't scale back output. This output currently stands at 4.77 million bbls a day from the second largest Organization of the Petroleum Exporting Countries producer after Saudi Arabia, making its commitment to any cut to OPEC's oil output very critical for the market. 

At the same time, DXY is rallying once again and has just penetrated the 98.80 resistance as markets get behind the notion of a Clinton victory and the Fed hiking rate sin December and resulting in a long-term appreciation of the currency throughout 2017.