Intraday Market Thoughts

Oil Spill Shrugs the Rest

by Adam Button
Mar 30, 2020 23:50

Each of equities indices, bonds and the US dollar rallied to start the week, save for oil prices which continued their battering. Is it a sign of a bottom, or quarter-end rebalancing? The Australian dollar was the top performer while the Canadian dollar lagged. China's official PMIs are due up next. In the Premium  Insights, Wednesday's USDJPY short at 111.20 hits final target 108.00 on Friday, while the DOW30 short and EURUSD long were closed on Friday for 990 pt & 215-pip gain respectively.  Below is Ashraf's video for subscribers on Gold/Silver/Indices open to all.

We're hesitant to take a signal from Monday's trading because of uarter-end flows that drove an unusually strong bid in everything USD-denominated.

On the fundamental side, we highlighted the Dallas Fed yesterday and it was far worse than anticipated at -70.0 vs +1.2 previously. Comments in the report highlighted strains on cashflow and worries about solvency. The area is being hit particularly hard because of low oil prices.

On that front, Brent hit at 17-year low of $21.65 and WTI fell below $20 once again. In Canada, oil is trading at less than $4 and that showed in the loonie. However it's clear that quarter-end flows were a factor in trading on the day as Canadian oil company shares rallied strongly despite falling prices.

Flow-driven trading may continue into Tuesday as the new month gets underway but should be less of a factor beyond that.

From Ashraf's Tweets

A few tweets from Ashraf on seeking bottom signs On sector-driven rally On why Lombardia Ashraf's Gold Poll

Increasingly the market will turn to data as March numbers begin to roll in. One coming up at 0100 GMT is the China PMI for March. The manufacturing number is forecast to rebound to 44.8 from 35.7 and services to 42.0 from 29.6. Real-time numbers like car sales and vehicle traffic show a spotty rebound in China but these numbers might offer a better idea.


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