Daily Alert: For Wednesday 27th January 2016

Mark Nugent2016 H1, Daily Alert, January 2016

Fundamentals and Sentiment

Initial nervousness today during the Asian session with stock market losses and a move to safe haven. Fortunately, when the Europeans got to their desks and then the Americans, things settled down.

The VIX is at 24, within Monday’s range and a lot lower than last week. The commodities index is down but higher than recent levels. WTI and Brent crude are both up. All Asian stock markets are down on the day with the two Chinese markets being down over 6%.The Japanese Yen index is up (i.e. JPY weakness and risk-on). This all points to the market being RISK-ON.

Yesterday Draghi was bullish on EU economy and efficacy of QE. It’s an interesting speech and worth reading. He did say that the key to a real recovery is confidence and it is not clear to me where that is going to come from with Brexit, low growth and inflation, ISIS and migrants (plus Greece, Portugal and Spain all lining up to revolt).

Today, US Consumer Confidence came in at 98.1 vs expectation of 96.6. Governor Carney appeared before the Treasury Select Committee. No new news there.

Critical Trades for this week

USDJPY – moved into negative territory during the Asian session but now around breakeven.

USDCAD – entry triggered today and current negative as the CAD strengthens on oil price rises.

EURUSD – possible tight channel forming. If it does a breakout down could be an entry signal.

Tomorrow’s Calendar

  • Australian CPI
  • US and NZ rate decisions.

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