HomeContributorsFundamental AnalysisOil Spill Shrugs The Rest

Oil Spill Shrugs The Rest

Each of equities indices, bonds and the US dollar rallied to start the week, save for oil prices which continued their battering. Is it a sign of a bottom, or quarter-end rebalancing? The Australian dollar was the top performer while the Canadian dollar lagged. China’s official PMIs are due up next. In the Premium Insights, Wednesday’s USDJPY short at 111.20 hits final target 108.00 on Friday, while the DOW30 short and EURUSD long were closed on Friday for 990 pt & 215-pip gain respectively.

We’re hesitant to take a signal from Monday’s trading because of uarter-end flows that drove an unusually strong bid in everything USD-denominated.

On the fundamental side, we highlighted the Dallas Fed yesterday and it was far worse than anticipated at -70.0 vs +1.2 previously. Comments in the report highlighted strains on cashflow and worries about solvency. The area is being hit particularly hard because of low oil prices.

On that front, Brent hit at 17-year low of $21.65 and WTI fell below $20 once again. In Canada, oil is trading at less than $4 and that showed in the loonie. However it’s clear that quarter-end flows were a factor in trading on the day as Canadian oil company shares rallied strongly despite falling prices.

Flow-driven trading may continue into Tuesday as the new month gets underway but should be less of a factor beyond that.

Ashraf Laidi
Ashraf Laidihttp://ashraflaidi.com/
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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