Another Flash Crash Event Hits Markets Overnight
Another flash crash type of event hit the FX markets last night. This time CHF pairs were subject to some serious volatility and moved about 113 pips or 1.12% in an extraordinary market event. The market then recovered the whole move over a 20 minute period and it was business as usual.
Elsewhere overnight Japan was closed due to a national holiday but China returned to the market after their new year celebrations. The Chinese Shanghai Comp. closed 1.35% higher as it was playing catch up and the ASX fell 0.18%. It all seemed very tentative ahead of the US-China trade discussions this week. Sticking with events in the US, it has been said that another shutdown is looming this week as talks in the White House have stalled yet again. American press reports are noting that Trump may call a 'national emergency' over the issue.
All major commodities markets are cautious this morning ahead of the aforementioned crunch talks this week. Copper has started the week on the back foot and trades below the $2.80/lb handle at $2.77/lb 0.94% lower, as it seems that the market has rejected the consolidation high once again.
Spot WTI is also 1% lower this morning confirming the bearish tone in commodities markets. There are some important events this week including the latest release of the IEA and OPEC monthly reports.
Gold is still above the pivotal $1300/oz level holding at $1311/oz in early trade. The next big support level on the way down is the $1298/oz support which in January acted as firm resistance for a move higher but eventually broke.
Today we are looking out for UK GDP, UK manufacturing production, UK trade balance and any comments from ECB's de Guindos.