Daily Alert: For Thursday 14th January 2016

Mark Nugent2016 H1, Daily Alert, January 2016

Today’s slides are HERE.

Today’s Economic News

The markets continue to calm down and the JPY index weakens…

  • Vix = 22.47. Starts the day with a gap down and then continues down.
  • WTI continues to slide very slightly today.
  • China stock markets both down today (CSI300 -1.9% and Shanghai -2.4%). All Euro stock markets down. Nikkei flat and Hang Seng down slightly.
  • JPY weakens on the day. The most significant weakening this year.
  • Volatility down across the board.

We look for stock market declines to help confirm a risk-off move together with a high Vix and a strengthening JPY. Today’s stock market move down is not accompanied by these other factors so I think we are continuing to move towards risk-on. I will begin to look at placing trades now.

It is important to remember that the markets are NOT the economy. The markets have over-reacted to the Chinese situation (as they do) which is simply a large economy trying to come to terms with a slowdown. (The real issue in the world is low growth and low inflation in the US and EU, with all central bank avenues for stimulation already exhausted. This will be a big theme for 2016).

Economic Calendar

Chinese trade figures outperformed at 382B surplus vs expectation of 339B. This was made up of exports coming in at +2.3% up vs expectation of a slide of 4.1%, and imports falling by only 4% against an expectation of a 7.9% fall.20150114 (1)Current Opportunities

1. USDJPY (reversal of JPY safe haven strengthening). The current price is above my postulated entry (as per Weekly Outlook) so I will now look to a move above the buy zone (around 118.40) before going long with stop safely below the 11th Jan low.

20150114 (2)

2. USDSEK (belief that the Riksbank will weaken the Krona). I will re-assess after tomorrow’s CPI data (this is not on the economic calendar).

3. USDSGD (weakening emerging market currency). USDSGD looks like the best pair for this trade. I will enter above current consolidation zone (where the price is going sideways).

20150114 (3)4. EURUSD – I have re-assessed my entry here. I will either wait for a return to the top trend line before selling, or I will wait for a breakout of the current channel (down) before selling. This is better than entering in the middle of the channel.

20150114 (4)5. USDCAD (oil weakness) – I will look out for an approach towards the 21EMA before going long.

Major News Items for Tomorrow

UK rate decision and monitary policy committee report.

AUD employment and US unemployment.

Swedish CPI (not on calendar).