The outlook is somewhat varied in the wake of weaker than expected data out of China over the weekend. Equities traders are still loking at the glass as being half full, whilst in forex markets the outlook is somewhat more wary. In the case of equities, this has continued on from a strong close on Friday on Wall Street with the S&P 500 up 1.6% and subsequently Asian markets are up across the board. The disappointing Chinese industrial production data (+5.4% versus +5.6% expected) and retail sales (+10.2% versus +10.8% expected) have failed to stem traders’ enthusiasm today (although the data is still probably being taken with a pinch of salt due to the impact of lunar new year in February). European markets are trading broadly higher in the early moves, however perhaps it is worth keeping an eye on oil today which continues to play a positive correlation with risk sentiment. Russian and Iranian oil officials are meeting to discuss the potential for supply restrictions and newsflow around this event could drive the market.
However, this air of positivity may not be stretching to the forex markets, where the outlook is more cautious with a more defensive slant. The euro is dipping back and the yen is slightly stronger against the dollar, however much of the riskier major currencies are trading weaker with the Aussie and Kiwi the biggest underperformers, perhaps the weaker China data is hitting across these markets. Furthermore, the gold price has formed some support this morning after Friday’s weak close. The oil price is also trading weaker as the European trading gets underway.
There is very little economic data of any note with only Euroone industrial production for January at 1000GMT (+1.4% exp). Also take note that the US had its time shift to Daylight Saving Time over the weekend and this means that US data will be announced an hour earlier in Europe this week.
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