Daily Alert – Friday 16th July 2021: OPEC deal scuppered by Iraq

Mark NugentDaily Alert, July 2021

Daily Alert – Friday 16th July 2021: OPEC deal scuppered by Iraq

On Wednesday, it looked like an OPEC deal was on the cards as the major stumbling block was removed when the UAE was granted a baseline production increase. However, on Thursday Iraq said they’d like a baseline increase too. Back to the drawing board. Oil fell on Wednesday and Thursday, and I traded the reversal last night with a pending order. The trade was triggering around 9am and is currently in the money. Sadly, I am not in the money as a huge spike downwards at 2pm took me out. It’s the worst feeling in trading – being right but losing anyway.

The economic calendar has thrown up a lot of interesting stuff this week. In the US, Fed Chair Powell in his testimony before Congress, reinforced his dovish policy. In the Eurozone, ECB’s Lagarde spoke of the need for further stimulus. In the UK we got mixed messages when the Financial Stability Report said continued support is needed, and two days later the Bank of England’s Saunders said it soon may become appropriate to withdraw some monetary stimulus. Then today the influential House of Lords Economic Affairs Committee said the Bank of England has not provided sufficient justification for continued QE and called for the Bank to provide better justification for viewing the increase in inflation as temporary. The Canadians sliced another CAD1bln/week off their QE programme. In New Zealand, the RBNZ is to stop their QE programme from today, just like that. Furthermore, Westpac is forecasting three rate hikes this year which is the number of meetings the RBNZ has left. Meanwhile CPI expectations were exceeded in all territories where there was a report this week (US, UK, NZ). That’s a lot of important stuff.

So how have assets reacted to all this good stuff?

Equities are flat or down over the week, despite the Fed’s dovishness being good for equities. Oil is down (prospect of OPEC fragmenting and a price was ensuing). GOLD is static. In terms of explicable currency moves, I see the USD up (on CPI), CAD down (oil) and the NZD up (Hawkish RBNZ, CPI and Westpac rate hike expectations).

And, as I said, I lost 1% on oil. Never mind, I’ll get it back and more next week, or soon.

It was a difficult week for trading, no doubt. That happens, and it is fine.

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