U.S. Futures Flat After Oil Erases Overnight Losses; Dollar In The Driver’s Seat
By Tyler Durden
In another quiet overnight session, the biggest – and unexpected – macro news was the surprise monetary easing by Singapore which as previously reported moved to a 2008 crisis policy response when it adopted a “zero currency appreciation” stance as a result of its trade-based economy grinding to a halt. As Richard Breslow accurately put it, “If you need yet another stark example of the fantasy storytelling we amuse ourselves with, juxtapose today’s Monetary Authority of Singapore policy statement with the storyline that the Asian stock market rally intensified on renewed optimism over the global economy. Singapore is a proxy for trade and economic growth ground to a halt last quarter.” The Singapore announcement led to a sharp round of regional currency weakness just as the dollar appears to have bottomed and is rapidly rising. The Singapore dollar slid 1 percent in the wake of the new stance.
Speaking of the Greenback, the USD rose against most major peers and base metals denominated in the U.S. currency fell to compensate for the appreciation. The dollar’s more than 6 percent drop since late January is starting to meet some resistance amid lackluster euro-area expansion and investor speculation that U.S. economic growth remains intact, strengthening the case for higher interest rates this year. To be sure, none of that speculation was actually confirmed by the data, with both retail sales and inventories missing but when did facts matter over narratives.
“We’ve seen stabilization in macro data in China, but stabilization is one point, re-acceleration is another,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany.
After crude dropped as low at $40.84, it rebounded and was trading unchanged after the latest IEA forecast predicted the global supply glut would narrow to just 200k b/d in 2H, down from 1.5m b/d in 1H. Brent mirrors WTI recovery after testing support at 200-day moving avg. “The IEA report bounced the market, being quite positive for when the supply glut will disappear, seeing this happen in 2H based on demand and based on non-OPEC production,” says Saxo Bank head of commodity strategy Ole Hansen. The market also remained keenly focused on any and all “Doha” headlines ahead of the OPEC meeting in Qatar on Sunday.
Also notable are the oil technicals: “We tested the 200-day MA earlier” Hansen added, but bounced back w/ IEA report, says Hansen. “If we close today below the 200-day MA that could trigger a negative technical reaction, but at this stage we are seeing a bit of a fightback.”
In Europe, the Stoxx 600 was little changed as miners and energy producers tumbled, while investors weighed earnings reports from Burberry Group Plc and Nestle SA. Commodity producers, the best performers among industry groups in 2016, fell for the first time in five days. Anglo American Plc and Randgold Resources Ltd. lost at least 2.7 percent. BP Plc led oil stocks lower. Lenders also declined, paced by Standard Chartered Plc and Barclays Plc, after jumping the most since 2011 on …read more
Source: U.S. Futures Flat After Oil Erases Overnight Losses; Dollar In The Driver’s Seat
