Daily Alert: For Wednesday 3rd February 2016

Mark Nugent2016 H1, Daily Alert, February 2016


Fundamentals and Sentiment

(Video below.)

The Vix moved below 20 for the furst time this year. The commodities basket dropped again. WTI and Brent both moved down paring back recent gains. All stock markets are down except the two Chinese markets which both closed up over 2%. The JPY index showed JPY strength and all three commodity currencies were down. Risk appetite is definitely risk-on.

In the news, on Monday UK Manufacturing PMI came in at 52.9 vs forecast 51.8. Good but manufacturing is a minor share of the economy. US Manufacturing PMI missed at 48.2 vs expectation of 48.6. US Core PCE (The Fed’s favoured measure of inflation) missed at 0.0% vs forecast 0.1%. (I FORGOT TO SAY THIS IN THE VIDEO – IT IS IMPORTANT). Draghi re-iterates the need for a significant monetary policy re-evaluation at the March meeting when significant new information will be available from his analysts.

Today, The RBA left rates unchanged in Australia. Governor Glenn Stevens was upbeat but did allow for the possibility of further easing in 2016. UK Consumer PMI missed badly at 55.0 vs forecast of 57.6. This is a large part of the economy and this is bad news. NZD global dairy returned a bad number at -7.4%. That’s 6 out of the last 8 prints being negative.

Critical Trades for this week

USDCAD – moving towards the entry price as oil sinks. If not in, consider entering now.

USDJPY – stopped out at 100 pips below Friday’s high. Gain of around +0.45% (approx 0.9 x risk of 0.5%).

EURUSD – stopped out at breakeven.

USDSGD – observe.

GBP weakness – await Thursday’s inflation report.

Tomorrow’s Calendar

  • BoJ Kuroda – look for new info on rate reductions and more QE.
  • GBP Services PMI
  • US ISM Non-Manufacturing PMI
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