Daily Alert: For Wednesday 13th January 2016

Mark Nugent2016 H1, Daily Alert, January 2016

Today’s Economic News

The markets are a lot calmer today. Still not fully risk-on.

  • Vix = 24.3 and going down.
  • WTI continues to slide. I will add USDCAD to the watch list and go long on pullbacks (when we’re risk-on).
  • Chinese stock markets CSI300 and Shanghai flat (+0.73% and +0.2% respectively). This is significant as it is the first non-loss making day this year. Elsewhere: S&P500 +0.1%; all European stock markets up; Nikkei and Hang Seng down slightly.
  • JPY index down on the day but the day’s range (high to low) is less than the ATR(14) so volatility is lessening.
  • Prior to today, almost all forex pairs since 4th January have shown a daily range higher than their ATR(14) indicating unusually excessive volatility. That is beginning to change, with around a third of the major pairs today showing a daily range less than the ATR(14). We are moving towards risk-on.

I will continue to wait for more favourable circumstances before executing the strategy outlined in the last Weekly Review and Outlook.

Economic Calendar

UK Manufacturing Production prints at -0.4% vs expectation of +0.1% sending GBP down to  lowest level against USD since June 2010.

Kuroda (BoJ) – “Nonetheless, the Bank’s efforts to achieve the price stability target of 2 percent under QQE are only halfway there….I believe that monetary policy in both the euro area and Japan will succeed in the near future, thereby starting a new chapter for macroeconomics.” We will see.

Carney (BoE) – speaking at same event at Kuroda. No text released at time of writing.

Major News Items for Tomorrow

China trade balance. Let’s hope the market does not over-react to any deviation to expectation.

Finally, I do know it’s frustrating while we wait for risk-on sentiment, but this is forex trading. To do otherwise is gambling.