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    US Market Open - February 16, 2016: MARKET UNDERWHELMED BY DOHA OIL AGREEMENT

    oil216.png

    Overnight Events

     • Oil powers fly to Doha for private pow-wow as $30 crude woes mount
    • Doha meets: Qatar min –We agree to freeze output at Jan lvls Rts
    • Doha-Freeze decision made by Qatar, Saudi, Russia and Venezuela Rts
    • EUR/USD mildly corrective after two-day slide-1.1147-1.1193
    • USD/JPY Offered again, Nikkei 0.2% higher-spot 113.65-114.87
    • GBP/USD mid-range despite CPI data-1.4406-1.4515
    • Brent was up over 6% now 2.4% higher after Doha oil meeting
    • UK Jan CPI 0.3% y/y vs 0.2%  prev, 0.3% exp
    • UK Jan Core CPI 1.2% y/y vs 1.4% prev, 1.3% exp
    • UK Jan Core Output prices 0.0% y/y vs 0.1% prev, 0.1% exp
    • DE Feb ZEW Econ Sent 1.0 vs 10.2 prev, 0.0 exp
    • DE Feb ZEW Curr Cond 52.3 vs 59.7 prev, 55.5 exp
    • Japan FinMin Aso – Will coordinate with G7 on recent market moves
    • RBA Feb 2 meeting mins– Sticks to guarded optimism on econ outlook

    Today’s events

    An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

    Option Expirations(Source:ThompsonReuters)

    • Implied vols well off last Thurs peaks as risk sentiment recovers
    • Mild demand at the lower levels on relative value buys
    • EU summit and the Brexit theme prop GBP gamma
    • EUR/USD 1mth vol gets ECB to limit deeper declines as ranges hold
    • USD/JPY 1mth vol 12.9 Mon vs 16.25 Thurs’, 1mth RR 1.5 vs 3.1 JPY calls
    • Big swings in Oil prop gamma in related currencies such as USD/CAD  

    Chart - NZD/USD-Cloud to overwhelm bulls  (Source:ThompsonReuters)

    Multiple failures to close above the daily cloud in February have led to the latest weakness in NZD/USD and bears will likely target the kijun line at 0.6551. A break and close below the kijun line will pave the way to 0.6500 initially. The market ran into strong resistance ahead of 0.6755 – 76.4% retracement of the 0.6881-0.6348 January fall. The cloud will fall and thicken towards the end of February which will put further pressure on bulls. A daily close above the tenkan line, currently at 0.6659, is needed to prevent deep losses in spot in the sessions ahead. Chart: https://tmsnrt.rs/1OdFMYT

    Economic Data(Source:Bloomberg)

     Feb16data.png

     


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