Market Drivers January 25, 2016
Europe and Asia
No Data
North America
USD: Consumer Confidence 10:00
Another choppy night of trade in the currency market today as marco flow once again dominated Asian and early European sessions with no major economic releases on the docket anywhere in the G-10 universe.
Asia saw risk off flow accelerate as Shanghai stocks once again experienced a sharp selloff dropping by more that -6% be session end. Despite keeping the yuan reference rate steady today, Chinese authorities continue to have difficulties stabilizing the market as investors persist in liquidating positions and that implosion of capital wealth is likely to have long term repercussions on demand in China.
Oil was the other factor in play today as crude dropped below the $30/bbl mark in late Asia but staged a recovery in early Europe on jawboning by Iraqi and Kuwait oil ministers. OPEC members appear to have finally become very seriously concerened about the crash in oil prices and clearly want to stabilize the commodity at the $30/bbl level. The fact that both oil ministers noted that Saudis were amenable to some output cut suggests that members are becoming more active in trying to control the market movements and that could set us up for relief rally in crude as shorts get squeezed.
Elsewhere the only event of note was the testimony of Governor Carney in front of the Treasury committee of UK Parliament which offered very little fresh information but reinforced the view that the BOE remains squarely neutral in its policy and sees no tightening in the foreseeable future. Mr. Carney stated that until trend growth and wage growth show a pick up the BoE will maintain the current policy. Cable was largely unaffected by the testimony hovering around the 1,4200 level for most of the London mid morning trade.
In North America the calendar is also quiet with only consumer confidence on the docket today and the flows will likely remain on macro factors. If oil can maintain bid it should provide a lift to equities and many move risk pairs higher as the day proceeds with AUD/USD targeting 7000 while EUR/USD sinks back towards 1.0800.