A Look at February Seasonals

Global indices resume their rally after a bounce in Asian markets following PBOC's biggest injection in over a year. But the news on the Corona virus front remain worrisome as cases exceed 20,600 and fatalities hit 425. USD is stronger across the board and GBP rebounds back above 1.30 on stronger than expected construction. Oil tested key support levels before bouncing on talk of a possible OPEC cut. Will take a look at some February seasonalities later below.

Click To Enlarge

Clashing statements from the UK and EU were a reminder that nothing is easy in Europe and that Boris Johnson's promise of a deal by the end of the year is a longshot. The pound sank to 1.2990 from 1.3175 as it wiped out the gains of the prior two days and closed at the lowest since January 12.

It's clear that both sides are going to be playing games, starting with the EU's Michel Barnier who said he offered a deal but only if the UK agrees to its rules. Boris Johnson rejected the offer only minutes later. It was a reminder that it will be a bumpy road toward a deal, if one ever comes. Political headlines will be a constant headwind. But pay a close watch on GBPUSD and the chart Ashraf posted yesterday, which continues to hold. US factory orders are next.

Elsewhere, sentiment was positive outside of oil. A risk-on bounce couldn't halt a drop that's now extended to 24% from the peak of the US-Iran flareup. Worse still, WTI crude fell below a triple bottom at $51 and broke $50 for the first time in 12 months. OPEC+ continues to make noise about a production cut but the market is already signaling that it won't be enough. Meanwhile, US 10-year yields bottomed at 1.50%

A quick look at the February seasonals:

Bitcoin has climbed in five straight years in February.

US natural gas is at a four-year low but Feb is the worst month.

US Crude oil (WTI) rose in February in each of the last 15 years, with the exception of 2018, 2013 and 2006.

Would you like to get these Intraday Market Thoughts in your mailbox? Start now.