Asia Market update : Oil, CNH, AUD, Trade

Stephen Innes SPI Asset Management

Oil market update

Commodity market, in general, remains a binary trade very much but China’s unquenchable demand for Oil and Gas is back in focus this morning after Reuters reports China’s November oil, gas imports set fresh monthly record REUTERS. Given the fact we are entering a 90-day trade war moratorium where its expected that China will increase imports of LNG and refined oil products, Prompt Oil prices are reacting positively to this pretty staggering headline which supports the demand side of the equation as this news bring something bullish to the table. In addition, a reported Lybian supply outage is also providing a fillip for prices this morning. Indeed looking much better than it did this morning when the market focus was singularly focused on the synchronized global growth slowdown.

USDCNH

While the magnetic 7 UDSCNH level is safe ahead of year-end, Sundays weaker than expected Chinese economic data November exports and imports posted 5.4 % YoY (versus Market 9.4%) and 3% YoY (versus market 14%); worse than the consensus. CPI was a touch worse than expected at 2.2% YoY (versus market 2.4%) while PPI was right inline at 2.7% YoY.is a stark reminder that the synchronised global slow down remains alive and well.

But it’s also a reminder that the Pboc will need to adjust monetary policy hard and fast to the right the economic ship.

USDCNH has tested 6.90 out of the gates this morning

AUDUSD

We’ve seen a modest retracement higher in the Australian dollar this morning, arguably short Aussie is the markets most crowded trade, after a significant and highly unexpected rebound) in Australia October home loans which handily beat market consensus while investment lending rebound well. While the intraday squeeze is on as traders sold AUD early this morning after the weaker China data, the markets are looking could be looking to stay short AUD given heightened risk around China which will likely tame any AUD upside ambitions.

Trade Tensions

US tension as the FT is reporting China summoned the US ambassador in Beijing to demand that Huawei CFO be release. Indeed, this news does play well for the China Vice Premier Liu He’s visit to Washington DC from 12-14 Dec’18. Then again when it comes to US negotiations the best-laid plans of mice and men often go awry.

Risk sentiment is still in the tank but appears to be stabilizing after this morning wobble, still, the bar remains very high for a bullish flip

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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