Morning Update 12/01/16 – by Michela Jaccarini
January 12, 2016Good morning!
Yesterday provided little fundamental news however was still a very good trading day due to China’s situation and the current general uncertainty in the market.
One of the most notable assets that took a hit was WTI oil; slumping to the price of $30.40, a place it hasn’t been at since 2003! With regards to crude oil, Iran will begin to sell a new grade of crude as earliest as March as it prepares to increase production once international sanctions blocking exports are erased. This increase in production will continue to pressure the price downwards.
Also, a continued resilience and strength in the dollar currency will further push the price down. A good currency pair to trade in combination with oil is USD/CAD as CAD is a commodity driven currency. Monday’s slump in oil prices pushed USD/CAD up to 1.42446, a price it hasn’t been at since May 2003. Since yesterday this pair has pushed up slightly further and is currently trading at 1.42623.
On Monday Dax also dropped significantly, hitting the price of 9651; a further weakness in the index could see it chasing the September 2015 low of 9297. It has since recovered and is currently trading at 9915.
China has also strengthened its defence of the Yuan by buying the currency in Hong Kong and sparking a surge in the city’s money market rates. The Yuan rose as much as 0.7% against the dollar in Hong Kong, briefly erasing its discount to the onshore rate for the first time since October. The PBOC also helped support the Yuan on Tuesday by keeping its reference rate for the currency little changed for the third day in a row.
Fundamental news to look out for today is the GBP Manufacturing Production (MoM) (Nov) at 9.30am GMT and BoE Gov. Carney’s talk at 2.15pm GMT; let’s keep these in mind and be careful when trading at these times.
Have a good day and good luck!
