FX Insights

OVERVIEW

    WTI crude tumbled $2 or around 6% to settle at $31.62/bbl following weak PMI readings from China, the world’s largest energy consumer and a senior OPEC source saying it was too early to talk about an emergency meeting. Gold continued to advance, this time by about $10 an ounce to $1,128.41, highest since early November. Interestingly, however, other asset classes moved in different and unexpected directions. Interest rates in the US increased modestly, the 2-year yield held around the 0.80%- mark, whilst the 10-year yield now hovers around 1.95%. The USD dropped against most of the major currencies, and US equities ended the session flat.

    US data came in weaker than expected in the form of personal income/spending, ISM manufacturing and construction spending. Meanwhile, Fed Vice Chair Fischer signaled caution that current market volatility could serve to undermine intentions of FOMC action in 2016. Today, January’s ISM New York index; February’s IBD/TIPP economic optimism index; as well as January’s auto sales reports are due. The Kansas City Fed’s Ester George will speak on the US economic and monetary policy outlook.