Morning Update – 19/02/16 – by Arjun Lakhanpal

Morning all.. Wall St stumbled after a few strong sessions as oil inventories burst the relief rally. The S&P closed down 0.47% and Asia was also rather soft with the Nikkei down 1.42% and HK down 0.5%. Oil is lower again this morning but marginally so with WTI at $30.50. It was USDJPY that was the stand out mover in the US session and this spilled into the Asian session with a low of 112.72 made. EURJPY was also sold heavily breaking 126 for the first time in a while and the pressure is still on. EUR nudged higher on the back of weak stocks and USDCAD continued its rally from the US session as oil extended losses.. Both AUD and Kiwi were lower in Asia as RBA’s Edwards (~01:38 GMT) said : AUD is too high; would be more comfortable at 0.65; not confident of seeing further AUD falls; Neg rates in other countries will put upward pressure on AUD. GBP failed to gain further as no deal between the UK and the EU on a deal. Talks look likely to run into the weekend some suggest. Overnight we heard from ECB’s Smets: if inflation stays near zero it could lead to low growth, if not deflation & recession; ECB policy saved us from recession but its not enough to solve our problems; cutting rates may not be sufficient; there is a limit to the ability to reduce real rates; crucial the ECB takes this into account; QE program is open-ended, meaning it will continue as long as is needed until we are sure inflation gets back to desired level..The OECD became the latest agency to cut global growth forecasts yesterday. The think-tank now see’s the world economy growing by 3% this year which is three-tenths lower than its previous forecast three months ago and the same pace as 2015. That included a five-tenths downgrade to its US forecast to 2% this year while China is expected to grow 6.5%. The biggest revision was reserved for Brazil however, who the agency expects to contract 4% this year, a downward revision of 2.8 percentage points. This morning we get Swedish unemployment data, UK Retail Sales and Public sector borrowing. Traders will be keen to see if any news comes from the UK/EU talks.. Good luck