Since it’s a much quieter week for news, the major announcements that do come out may attract a lot of attention from the street. This appears to be the case for this month’s China trade report which has had a wide impact.
The report was mixed with the overall trade balance not as good has hoped, exports falling even more than feared but imports falling less than feared.
This news has sent resource currencies falling with AUD leading the way downward, but NOK, CAD, SEK, NZD, ZAR, MXN and RUB also posting declines mainly in the 0.3-0.7% range.
Oil sensitive currencies have continued to weaken despite a rebound in WTI and Brent this morning, This action suggests traders see the oil price moves as dead cat bounces particularly with recent breakdown points of $37.40 and $42.00 becoming new resistance. An improvement in China imports got the credit for the rebound but as long as Saudi Arabia and its allies remain at odds with other OPEC countries like Iran and non-OPEC countries like Russia, Canada and the US over production, there appears to be no end in sight for the supply war which could keep prices depressed for a long time to come. This morning’s oil rebound has turned out to be short lived with WTI and Brent resuming their downward course over the last hour or so.
In other news, GBP has also been weakening today after UK same store sales, Halifax house prices and manufacturing production came in below expectations, partially offset by a stronger industrial production report. As with the resource currencies, resource stocks in the FTSE don’t appear to be putting much faith in the oil bounce with mining stocks also under pressure.
JPY has been outperforming following a strong upward revision to GDP well up into positive territory and causing recession fears to evaporate. This also reduces pressure from the Bank of Japan to bring in more stimulus.
Stock markets around the world are trading lower this morning. Asia Pacific indices have been testing channel support levels and appear vulnerable to breakdowns. Indices in North America and Europe appear to be having normal downdraft within their established sideways trading ranges. The usual pre-meeting blackout on FOMC speakers starts today so indices nor find themselves fully in-between key announcements still reacting to last week’s ECB meeting while looking ahead to next week’s FOMC meeting.
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