Oil is climbing today as the market gains some optimism after rumours of an OPEC meeting in March hoping to put a cap on production. In my opinion, such optimism may be misplaced as any curb in production will just be taken advantage of by the other producers trying to take market share. At the end of the day, even if we cap production at current levels, there is still an excess of 4 million barrels a day. The solution has to be to stop the over supply, not to keep it at constant levels. And for that, you need everyone to agree. A prospect that is very unlikely.
Japanese CPI was soft today, but did not show contraction as I expected. Regardless, being virtually flat, it is still far from the BOJ’s target levels and we expect stimulus from the BOJ in March.
US data remains on tap, including Q4 GDP revisions (expected downwards revision), PCE, Personal Income and Spending. This data will determine the manner in which the market closes today, so we should watch it with a close eye. It will give a good indication on whether perofrmance can match the FED’s intention to raise rates this year.
Thus far the market remains risk on, unfortunately, we have not been able to capitalise on it as bad luck for a third day in a row seems to be ensuring that spreads widen and change near our Sls and Tps to make sure their either get hit or they don’t trigger. With this happening over 40 times now in 3 days, during periods of no data releases and the widening happening to the perfect point to the exact pip, I am left wondering if all of us have been breaking mirrors for all of this week. We have literally lost over $200,000 in unrealised profits this week due to this bad luck.