WTI crude advanced past $48 a barrel on hope that the additional cheap cash supply from central banks would boost the energy demand and lift oil
prices. Plus, OPEC will meet on March 5-6 and will likely curb production with or without the support of Russia. For now, WTI is expected to
hold on to its recent recovery on expectation of improved risk appetite and a tighter OPEC supply. But the risk is, not any cut would do. Any
disappointment from OPEC could send the market into the bears’ hands by the end of this week.
Gold fluctuated within the $1575/1600
range. Disrupted negative correlation between gold and risk assets combined with a high load of net speculative longs hint that trading in
this market could be unpredictable and volatile in the coming days. Support is seen near the 50-day moving average, which currently stands
near $1568.
But demand for safe haven currencies remained intact. The Swiss franc and the yen gained in the overnight trading session.
The USDCHF slid below 0.96 and the USDJPY consolidated under the 108 mark, suggesting that there is some uncertainty regarding the
sustainability of the US recovery on Tuesday and we may not see another bang at today’s trading session.
US stock futures edged lower
in Asia, then reversed early weakness.
FTSE (+0.93%) and DAX (+0.94%) futures hint at a positive start as European traders walk in, yet
gains may be fragile.
The euro extended gains to 1.1155 against the US dollar, as the US yields consolidated at historical lows on
expectation that the Fed may slash rates by 50 basis points, double the 25 basis-point standard cuts. Rising dovish Fed bets should continue
weighing on the US dollar and encourage a further advance toward the 1.12 mark. However, the European policymakers can not sit with their
hands tied faced with the coronavirus outbreak, which has been spreading within Europe and threatening the economic activity. Once the
market is done pricing in the dovish Fed expectations, it may the ECB’s turn.
Across the Channel, the selling pressure on the pound becomes
stronger as trade negotiations between the British and European policymakers hint that the UK may crash out of the bloc with no deal in hand.
No-deal Brexit worries should encourage a further Sterling sell-off. Cable could extend losses toward the 200-day moving average, near
the 1.27 mark.
By Ipek Ozkardeskaya