Oil takes front centre and sees gains wane; as Saudi Arabia, Russia, Venezuela and Qatar agree on an oil production freeze deal. The ECB remains poised to act against financial market turbulence, with risk to euro price stability likely to follow from energy prices.
Asian markets rallied following opening after Chinese New Year; supported by PBoC Governor Zhou’s endorsement on stable payment balance positions. Continued fixing of the yuan saw it’s largest one-day advance against the dollar amidst economic headwinds. On the other hand, BoJ launched its historic negative interest rate initiative, which sees global share sell-off activity rise.
Meanwhile investors’ risk appetite returns, the demand for gold has weakened moderately following last week’s high.
Expect the rally to fade and volatility to continue, as global markets remain sensitive to policy moves.
CL.NYMEX @ 27.50
Watch USDCNY at 6.570
USDCNY @ 6.570
Watch USDJPY at 114.25
USDJPY @ 114.25
Watch XAUUSD at 1240
XAUUSD @ 1240
The S&P 500 seems to have found a short term bottom around the 1812 level with the Index consolidating at current levels. There continues to remain a high likelihood of another down move though the Index has fallen enough for a substantial rally to start from current levels. The next week or two should prove interesting for the Index especially if central banks like the ECB add to their easing program which would be good for risk assets. We also find the retail sales report on Friday encouraging which continues to suggest that the US economy grows at a slow but steady rate.
POSITION: LONG 1,000 XIV @ 22.47
Watch SP500 at 1866.70