Weekly EIA US crude oil inventories +2377K vs -728K expected

  • Prior was +515K
  • Gasoline +1297K vs +2548K exp
  • Distillates -2798K vs -1260K exp
  • Refinery utilization -0.4% vs -0.4% exp

API data from late yesterday:

  • Crude -872K
  • Gasoline +2400K
  • Distillates -2200K

The four-week rise in US gasoline inventories is the largest since the start of the pandemic but the oil market doesn’t care. A report today from Energy Intel suggested that OPEC+ thinks the recent rise in crude is geopolitical and I have a hard time arguing against that.

Not much on the agenda in Europe today

The focus on the day will reside on the Fed, so it may be tough to see investors gather much conviction before we get to that.

As such, European trading today may be more of a quiet one featuring little significant market moves. There isn’t anything notable on the economic calendar to shake things up, so there isn’t much headlines to work with either.

For now, the risk mood is slightly calmer with US futures up a touch but that comes after the drop yesterday. Meanwhile, the dollar also saw gains trimmed in overnight trading and is keeping more mixed at the moment. That said, changes are light in FX and may likely keep that way until we get to the Fed.

0745 GMT – France January consumer confidence
0900 GMT – Switzerland January Credit Suisse investor sentiment
1200 GMT – US MBA mortgage applications w.e. 21 January

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

China’s onshore yuan reference rate to a near 4 year high, TWI even stronger

The ‘basket’ however, i.e. the CNY weighted against major trading partners, hit 103.5, which was its highest since August of 2015.

  • The basket contains the currencies of 13 of China’s major trading partners
  • It was set at a 100 base as of the end of December 2014
  • The China Foreign Exchange Trade System (CFETS, a unit of the PBOC) manages the basket

There has really be no let up in yuan appreciation despite official remarks about it stabilising. A stronger yuan will weigh on Chinese exports, but with the external sector is better shape than the domestic a higher currency gives the People’s Bank of

ICYMI – US warns of targetting sanctions personally against Putin if Ukraine invaded

AFP had the small snippet:

  • The United States warned Moscow of damaging sanctions, including measures personally targeting Vladimir Putin, as Russian combat troops massing around Ukraine launched new exercises.
  • “Yes. I would see that,” Biden said when asked by reporters in Washington about targeting Putin

It’d be great if this de-escalated tensions. We’ll see.

2 things to watch at the FOMC meeting

A snippet from Citi on the Federal Open Market Committee meeting:

  • “Two aspects of this Meeting will be closely watched:…
  • 1- We expect the Fed to complete its final phase of net asset purchases.
  • 2- Any signaling on the pace and size of rate increases, and the run-off of asset holdings.
  • We think the Fed will signal the beginning of the rate hiking cycle but otherwise remain vague about the pace and timing, and signal that it is likely to begin balance sheet run-off ‘later this year’. Even though we do not expect any precision, we expect the Fed to guide towards a gradual rate hike path. In line with the above, and Citi US economists’ view, we think that a 50bps hike is very unlikely in March,”
  • “The key hawkish risk to our view is for the Fed to end QE early, unless the Fed counterbalances an early end to QE with a clear desire to raise rates even more gradually,”
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