Daily Alert – Friday 18th September 2020: WTI rises as Saudis threaten “ouching”

Mark NugentDaily Alert, Sept 2020

Daily Alert – Friday 18th September 2020: WTI rises as Saudis threaten “ouching”

Risk sentiment has been indecisive all week.

We had three central bank rate announcements. On Wednesday the US Fed disappointed the markets by not being dovish enough, i.e. no new stimulus for the US economy, acting as rocket fuel for yet further rises in US equity indices. Who has time to wait for corporate performance to grow the indices when it is easier to just ask the Fed to buy it for you with taxpayer-funded stimulus?

On Thursday we had Super Thursday from the Bank of England. The interest rate and QE were left unchanged as expected. However, the bank did admit to contingency planning for negative rates, which bashed the GBP.

Also on Thursday, the dull-as-ditch water Bank of Japan lived up to expectations by keeping everything the same, as expected.

As of 1500 BST, global equity indices are flat as a pancake that has been flattened by a steam road roller.

Same with GOLD.

WTI (“spot oil” – i.e. for immediate delivery, as opposed to a futures contract) has clawed back most of the last two weeks’ losses. This comes after this week’s OPEC+/JMMC meeting where further production cuts were NOT discussed. Further, the Saudi oil minister Prince Abdulaziz warned oil speculators not to bet against OPEC+ and that he is going to make sure whoever gambles on this market will be “ouching like hell”. That is not something you want to hear from a moustachioed man in a dress.

In the currency markets, hindsight shows that the JPY was the most tradable as it was strong every day this week. USDJPY short would have delivered around 5x risk if entered on Monday night. Sadly, there was no rationale for entering this trade, sentiment or otherwise. Also strong every day was the NZD, despite going into a technical recession on Wednesday when a second quarter of GDP contraction was announced. The GBP was perky until negative interest rate talk from the Bank of England kiboshed that.

I did not trade this week as I was away until Wednesday afternoon.

Trade of the week (in hindsight, but I think with a rationale) was WTI long which, if entered on Tuesday night after the rise up from support and the bullish API inventory number, would have yielded almost 4x risk.

Have a great weekend and I’ll be back on Monday.

VIP Club members can get the final powerpoint and the short review video for Trade 49 (GBPUSD short, +2.46%), HERE under the “Videos” tab.