The oil market has very swiftly made an about-move in recent days, with low prices driving disruptions in Nigeria, coupled with greater output from Iran and expectations of renewed demand all pushing the price higher, and leading some factions to pull forward price forecasts in the shorter term.
This upside is helping to keep the wolf from the door for the FTSE 100, pushing oil producers slightly higher but still under pressure owing to weak China data.
The Dax is closed for Whit Monday.
Economic data from China continues to point to a slowdown in the second largest economy, with weekend data releases that included industrial production, retail sales and fixed asset investment all failing to meet consensus.
As to whether this will bring about another round of economic stimulus remains to be seen, but risk sentiment is not firing on all cylinders this morning thus far. Gold is in favor, adding 0.59%, while silver powers ahead by 1.1%.
EUR/USD trades in a very tight range, little changed at 1.1324, and trade volumes are expected to stay fairly thin owing to Whit Monday in Europe. The bias is for a lower euro, but for now it's holding above the 1.1283 level (Friday’s low) as the pop in EUR/JPY and USD/JPY keeps it bid above 1.1300.
Cable treads water, above the 1.4340 low last seen on Friday. Any close through here would put the round number c($1.40) back in the frame. With 37 days till the EU referendum, it should surprise nobody that volatility in GBP/USD two-month tenor has risen to 18.33% - that’s the highest since March 2009.
Likewise, the yen is fairly static against the buck, trimming losses after Japanese PM Abe said fiscal measures were needed to create demand amid reports that he is to stall on the implementation of a sales tax increase.
CFTC data for last week indicated that Specs cut net short USD bets, JPY net longs to 58k contracts, EUR shorts off to 21.8k, AUD longs 38.1k vs 52.4k.
This week’s Fed minutes release may well give some substance to the belief that ‘Brexit’ is a delaying factor when it comes to rate normalization.
The greatest probability for a move is assigned to December, where the sovereign debt market indicates a 53% chance of a hike – it remains at a 4% probability for a June hike, so it would be a massive shock to the market should Yellen decide to make a move.
A light macro calendar today with NY Fed Empire State manufacturing index out later this afternoon (6.5 eyed; last 9.56) and NAHB Housing market index also due (59 exp. 58 previous).