IronFX Daily Commentary by Sakis Paraskevov | 13/01/2016
January 13, 2016 9:45 am
WTI falls below $30/barrel • WTI crude oil tumbled, briefly falling below the USD 30 level, its lowest intraday price since December 2003. • The 12-year low price threatens the survival of a number of US shale firms, as they may not be able to remain afloat at the current low prices. It also hints more trouble for major crude-producing nations, who in the absence of major energy-sector investments could experience an increase in their unemployment rates. • There are no signs that drillers will decrease supply in the foreseeable future and as global demand is weakened by fears of a Chinese slowdown, oil prices as well as oil related currencies like CAD and NOK could remain under selling pressure.
Chinese trade data stronger than expected • China’s total trade contracted much less than expected in December. Exports fell by 1.4% yoy vs expectations of -8.0% yoy. Imports also fell, but not as sharply as expected. • The surprising data indicated that exports may be benefiting from the yuan’s depreciation against the dollar in late 2015, which has continued with the new year. • The improvement in imports may reflect factories stocking up on cheap oil, iron ore or other commodities. Overall, the December trade data have offered some signs that the economy may be stabilizing, but at a slow pace. AUD/USD and NZD/USD, which could have otherwise come under renewed selling pressure on the news, had no major reaction.
Today: • Sweden: PES unemployment rate for December. • Eurozone: Industrial production for November is forecast to have fallen. Bearing in mind that industrial production also fell in Germany and France during the same month, we see a high likelihood for a soft IP print for the entire bloc as well. This could weaken EUR a bit, at least at the release. • Speakers: ECB Executive Board member Sabine Lautenschlaeger, Boston Fed President Eric Rosengren and Chicago Fed President Charles Evans.
WTI falls below $30/barrel
• WTI crude oil tumbled, briefly falling below the USD 30 level, its lowest intraday price since December 2003.
• The 12-year low price threatens the survival of a number of US shale firms, as they may not be able to remain afloat at the current low prices. It also hints more trouble for major crude-producing nations, who in the absence of major energy-sector investments could experience an increase in their unemployment rates.
• There are no signs that drillers will decrease supply in the foreseeable future and as global demand is weakened by fears of a Chinese slowdown, oil prices as well as oil related currencies like CAD and NOK could remain under selling pressure.
Chinese trade data stronger than expected
• China’s total trade contracted much less than expected in December. Exports fell by 1.4% yoy vs expectations of -8.0% yoy. Imports also fell, but not as sharply as expected.
• The surprising data indicated that exports may be benefiting from the yuan’s depreciation against the dollar in late 2015, which has continued with the new year.
• The improvement in imports may reflect factories stocking up on cheap oil, iron ore or other commodities. Overall, the December trade data have offered some signs that the economy may be stabilizing, but at a slow pace. AUD/USD and NZD/USD, which could have otherwise come under renewed selling pressure on the news, had no major reaction.
Today:
• Sweden: PES unemployment rate for December.
• Eurozone: Industrial production for November is forecast to have fallen. Bearing in mind that industrial production also fell in Germany and France during the same month, we see a high likelihood for a soft IP print for the entire bloc as well. This could weaken EUR a bit, at least at the release.
• Speakers: ECB Executive Board member Sabine Lautenschlaeger, Boston Fed President Eric Rosengren and Chicago Fed President Charles Evans.
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