These weeks sell off in crude oil has led to a shift in sentiment with the energy sector dampening stock prices in early trade before we saw a slight bounce back with the DJIA gaining 0.18%, the S&P 500 gaining 0.34% and the NASDAQ 100 finishing up 0.22%. Asian equities traded mostly higher with the Nikkei 225 enjoying the weakness in the JPY to finish up 0.7% while the ASX 200 gained an impressive 0.9% as weak data keeps the prospect of more easing alive. Chinese stocks kept slightly bid with the Shanghai Composite gaining 0.3%, capped by the PBOC being less aggressive with their liquidity operations.
In FX, the USD found its composure as bulls pushed the USD INDEX back above the 100 mark. The AUD gave back some of its recent ground after disappointing data, which has investors making room for further interest rate easing in the future. The EUR managed to stay slightly bid with the EURUSD keeping its footing above 1.0700. While the USDCAD has stalled at the 1.3250 support level ahead of today’s key economic releases, which sees the Bank of Canada releasing its overnight rates, expected unchanged at 0.5%, and its rate statement which if positive will lead to a further upside in the CAD and conversely if the BOC report is negative, we will see the CAD give back some of its recent ground. The GBPUSD has come off its weekly highs to trade over 150 pips lower in anticipation of today’s Manufacturing Production m/m figure, expected at 0.2%. Should the actual print beat the expectation, we will see further upside as investors in the GBPUSD look to retest 1.2800 while a worse than expect release will see the GBPUSD head south to 1.2500.
In commodities, crude oil has taken a lashing as it drops from its highs of $53, trading at the $51 support level. Today’s Crude oil inventories will help decide the future direction of the commodity, with better than expected result, leading to a push higher in crude while a worse than expected result will see crude bears come out of the woodworks to test the $50 mark. Gold continues to be sold off despite a recent regain of composure which has seen the precious metal move $15 off its recent lows in anticipation of further news. Any news which imply a stronger USD or a more risk on sentiment, will see the precious metal dip back towards the $1150 mark while a drop in the USD or cause for risk off trading, will see the precious metal quickly make up some of its lost ground as investors head north towards the $1185 mark.