Archives of “January 30, 2020” day

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OPEC+ may move up its meeting to early February – report

  
  Analysis

OPEC ready to cut again?

Saudi Arabia has opened discussions on moving up the OPEC+ meeting from March to early February because of the oil price slide, according to four sources cited by Reuters.
No final decision has been made and Iran could oppose the move. They also said Russia wasn’t keen on the idea.
Lost in all the fear about coronavirus is the shutdown in Libya. Or alternatively — even the shut down in Libya isn’t allaying the fears of a demand drop due to millions of Chinese quarantined and staying off the roads and out of factories.

One thing to add to your economic calendar today — WHO press conference

  
  Analysis
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Press conference is scheduled for 1830 GMT

The World Health Organization is meeting right now in Geneva to discuss whether to designate coronavirus as a global public health emergency.
They plan to hold a press conference at 1830 GMT (1:30 pm in New York).
The committee was divided seven days and there have been cases of human-to-human transmission outside of China so I think it’s assured that an emergency will be declared. I expect the decision could leak out before the press conference as well, so watch out for that in the next few hours.
How will the market react? It should be priced in but the market is struggling to get a handle on the scope and scale of this virus so there’s an element of headline shock that I think could sour the mood.

India’s gold demand fell 9 per cent in 2019 but set to recover: World Gold Council

  
  Analysis
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Indias gold demand was 9 per cent lower in 2019, at 690 tonne, primarily owing to the sharp surge in prices, however, it is expected to rebound in 2020, the World Gold Council (WGC) said on Thursday.

The council said India’s gold demand will be in the range of 700-800 tonnes in 2020 from 690 tonnes in 2019.

“Looking ahead, 2020 we expect policy-led and industry-led initiatives to bring a marked shift in making the industry more transparent and organised,” said Somasundaram PR, Managing Director, India, World Gold Council.

He added that the government has already made hallmarking mandatory on January 15, 2020 with a transition period of one year for the trade to sell or change its existing non hallmarked inventory.

“This is an overdue reform and a positive step towards making the Indian gold more trustworthy. These and other changes to follow are significantly positive for the long-term sustainability of demand, especially for the compliant and the organised,” Somasundaram added.

However, the report said that short-term challenges remain as large sections of the industry compete on low margins and fear tax uncertainty, leaving little incentive for long term investments and modern trade practices.

Globally, WGC said that Gold demand fell 1 per cent in 2019 as a huge rise in investment flows into ETFs and similar products was matched by the price-driven slump in consumer demand.

Besides, the central bank net purchases in 2019 were remarkable the report said. The annual total of 650.3 tonne is the second highest level of annual purchases for 50 years.

In total, 15 central banks increased their gold reserves by at least one tonne in 2019.

Demand was exclusive to emerging market central banks looking to bolster and diversify their overall reserve, WGC said.

Key takeaways from the BOE policy statement today

  
  Analysis
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Where does the pound go from here?

The most significant change in the statement is the forward guidance. Let’s take a look at the changes as per below.

December policy statement:

“Monetary policy could respond in either direction to changes in the economic outlook in order to ensure a sustainable return of inflation to the 2% target. The Committee will, among other factors, continue to monitor closely the responses of companies and households to Brexit developments as well as the prospects for a recovery in global growth. If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation. Further ahead, provided these risks do not materialise and the economy recovers broadly in line with the MPC’s latest projections, some modest tightening of policy, at a gradual pace and to a limited extent, may be needed to maintain inflation sustainably at the target.”

January policy statement:

“Monetary policy will be set to ensure a sustainable return of inflation to the 2% target. Policy may need to reinforce the expected recovery in UK GDP growth should the more positive signals from recent indicators of global and domestic activity not be sustained or should indicators of domestic prices remain relatively weak. Further ahead, if the economy recovers broadly in line with the MPC’s latest projections, some modest tightening of policy may be needed to maintain inflation sustainably at the target.”

I’ve marked in bold the key changes. So, what are they saying?

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BOE leaves bank rate unchanged at 0.75%; votes 7-2

  
  Analysis

The BOE announces its latest monetary policy decision – 30 January 2020

  • Prior 0.75%
  • Votes 7-2 vs 6-3 expected
  • Asset purchase target £435 billion
  • Corporate bond target £10 billion
  • Guidance for limited, gradual tightening has been dropped
  • Haskel and Saunders dissented, voting to cut the bank rate by 25 bps
  • Growth outlook revised lower, inflation seen below target until end of 2021

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US’ Pompeo: China presents the central threat of our times

  
  Analysis
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Says that Chinese Communist Party agenda is not consistent with US’ values

With all the talk about the coronavirus these days, let’s not forget that the US and China still can’t get along on many other issues like Huawei and more structural issues as loosely covered in the Phase One trade deal that was signed two weeks ago.

Russia reportedly to temporarily stop issuing electronic visas to Chinese nationals

  
  Analysis

RIA reports, citing the Russian foreign ministry

The temporary restriction will go into place starting from today, 30 January.

Yet another heightened security measure being undertaken from a government/country in relation to the new coronavirus outbreak. Although the virus itself is not seen to be as deadly as SARS for now, it is still proving to be quite highly contagious.
And the fact that there is still so little known about how the situation is going to develop and that governments/countries are taking such heightened precautions, is continuing to make markets feel very uneasy about the whole thing.

A tip for Bank of Engalnd’s Thursday Meeting

  
  Analysis
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Are you ready for the readies?

Are you ready for the readies?
The chances of a Bank of England rate cut are still around 50%. This means that this is an elevated chance of a surprise on Thursday.  So here is a tip of how to deal with the rate announcement.
Sell on stop 
A few minutes before the announcement place a sell on stop order on a GBP led pair. This is because you are wanting to sell the GBP in case of a Bank of England rate cut. Now, don’t place the sell on stop order too close to the price. Instead, place the sell on stop order about 25-35 points below the price. Place your stop 10 or so points above the current price (So, a total of around 40-50 points). Now, if the price wobbles prior to the rate decision, just make sure you don’t get pulled in. Keep dragging your order away so you are around 25-35 points below price.  As a word of caution, do not try this with a buy on stop order as you may be triggered in by the bid/ask spread before price seems to get to you order level. You won’t have the same issue with a sell on stop order.
Thursday
Now, if the BoE do cut,  you will be triggered in. Well done you.If you are a retail trader and you have a market maker you may get an excellent fill (sometimes market makers actually give
very good fills, despite what you might think, as they can provide their own market in cases of volatility). I had a great run with a market maker broker for awhile.  If we get a rate cut then a fall of around 150 points on the GBPUSD should be in order.
If we don’t get a cut then check to see the forward guidance from the BoE as they may signal a cut coming. At any rate, get ready for a potential surprise for the GBP on Thursday and try my tip.
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