One major risk to the market calm this week is Thursday’s virtual meeting between Saudi and Russia. The euphoria around a potential 10 to 15
million bpd cut has been devoured so fast by the market that one questions whether a cut of this size is enough to encourage a sustainable
recovery in global oil prices. WTI crude rebounded from $25 a barrel, but the positive trend appears to be losing momentum into the
Thursday’s decision. While the expectation of Saudi-Russia announcing a surprise cut should put a floor under the oil’s slide, failure to
satisfy the hungry traders could still trigger a sharp decline before the weekly closing bell.
There is little action in the FX markets. The
EURUSD pushes for an extension toward the 1.10 mark, where bulls and bears will be fighting over the next couple of days. The positive
reversal in net speculative long positions in euro hints at an improved sentiment in the single currency for the first time since September
2018. Combined with a narrowed rate differential amid the Federal Reserve’s (Fed) back to back interest rate cuts, the EURUSD has potential
to consolidate and extend gains above the 1.10 level.
The pound is slightly better bid against the US dollar as the temporary leadership
change amid Johnson’s journey in intensive care hasn’t led to anxiety in British politics. Still, decent offers are eyed approaching the
1.25 handle before the release a series of important economic data due Thursday.
The FTSE 100 is set for a slightly negative open on the back
of a dip in oil prices.
By Ipek Ozkardeskaya
