After hitting a massive speedbump over the past 48 hours or so, Oil investors are dipping their toes back into the no less certain waters as risk has tentatively stabilised. But prices remain very firm even after DOE reported a larger-than-expected build suggesting a bit of discount in the numbers as refinery maintenance work continued to limit demand. Regardless it’s hard to sugar coat this week’s inventory report, and tumultuous week, traders are more apt to pare rather than increase risk. So, in the absence of significant headlines, we could see consolidating into the week, but with oil prices holding firm above$ 80.00, the bulls haven’t completely lost the plot just yet
Excellent trade data from China for September.
The trade balance has come at USD31.7bn versus 19.2bn expected. Exports are substantial at 14.5% YoY versus 8.2% expected, and imports have done well coming at 14.3% versus 15.3% expected. but I wouldn’t get too excited as dealers will buy this dip below 6.90 based on today fix view
There’s a semblance of sanity returning to the markets, but we are no nearer a significant recovery, but the Politico article which stated the internal report to Treasury Secretary Steven Mnuchin did not recommend that Beijing is labelled a currency manipulator has eased tension although we are not out of the weeds just yet. On the flipside, the Pboc continues to offer up confusing smoke signals as its yet another day when USDCNY and USDCNH see a big move higher. Mixed messages are confusing the landscape as again today we got another higher than expect fix which is greenlighting CNH bears to jump into the position with more belief after last night sell-off. And with the unpredictable nature of commander and chief, Donald Trump does raise the level of uncertainty; there is nothing inevitable about an escalation of his long-standing China is currency manipulator themes.
This market is exhausted from all after the most significant sell-off in global equities since Feb. Its large shake out the landscape remains no less uncertain and while the current narrative is likely to rage on until Novembers G20 summit at least, prudence suggesting keeping one’s powder dry on the recovering Friday and live to fight another day after yesterday most unpleasant experiences.