Risk sentiment for February 2016
Where to for February. Another year another month. January 2016 did not get off very well as China rocked the boat right off the blocks. It’s Caixin Manufacturing PMI came out far worse than expected. Infact in January the forecast was for a Positive outcome !!! February the forecast is for continued negative sentiment. It will be interesting to see if when the data is made public how bad it really is.
This is where it’s important to understand Risk Sentiment. What is the overall sentiment bias out there on the global market. The 1st couple of weeks of January saw loads of risk appetite sentiment as China’s data gave the global markets a scare. Having said that towards the end of January we saw that sentiment changing. Is the change just a consolidative – will we see further negative sentiment coming back into play. There are a number of other stats that will play a part this week too.
ECB President Draghi speaks later this week. Ongoing geo political issues within the Eurozone might very well be a concern. Further QE might very well have to be implemented in 2016. It remains to be seen if the ECB does look at that option and how it will address it.
BOJ cut interest rates in of last week to -0.1%. 1st time the third-largest economy in the world has done so. 5-4 voted in favour of the cut to try and stimulate a stagnant economy.
Bank of Japan (BoJ) was quoted “The BoJ will cut interest rates further into negative territory if judged as necessary,adding it would continue as long as needed to achieve an inflation target of 2%. This stance does not effect every day savers BUT it’s meant to effect commercial banks who will now be charged by the central bank for some deposits. It will remain to be seen if this move does help revive Japans faltering economy any time soon.
Low Oil Prices have not helped either. Inflation continues to fall globally. Iran has had sanctions lifted recently and they will undoubtedly try and sell their oil on an already saturated market. This could have a further impact on Oil prices for 2016. Iran and Saudi Arabia are not the best of friends as events last month will reflect. Global Investors see are seeing too many risk factors entering the picture. This will only continue to paint a worrying picture for trend direction in 2016.
All these factors and more are of a concern so when looking over your charts at the end of each week be vigilant – keep an eye on currencies that reflect the bias of the global Market – risk sentiment. There are a number of Pairs that move directly or in directly due to the risk sentiment of the Global Market. This is where you need to focus your attention on to get a realistic gage of where to trade going forward.
Get that right and you’re on a winner looking ahead.
Deprecated: File Theme without comments.php is deprecated since version 3.0.0 with no alternative available. Please include a comments.php template in your theme. in /home/sereneeducation/public_html/wp-includes/functions.php on line 5653