|

DoJ bringing down European banks

  • Banking sector under fire from DoJ

  • Crude bounce fades after output cut

  • Eurozone CPI rises to 8-month high

Market sentiment continues to suffer as a result of recent Deutsche Bank woes, with the financial sector leading the race to the bottom this morning. With the US Department of Justice aiming to also penalise Barclays and Credit Suisse alongside Deutsche, there is a fear that we could see huge amounts of fines levied across the whole industry, effectively wiping out much of the safety buffers built up in case of emergency.

The glee evident within the energy markets in the wake of the OPEC cut this week appears to be fading, with both Brent and US crude pulling back overnight. The problem is that even if we do see this agreement put into action, we may not even see a substantial rise in crude prices, with increased US output responding to any rise in oil prices.

Eurozone inflation rose to an eight month high in September, proving that there is something behind Mario Draghi’s insistence that rising inflation expectations should soon impact current inflation rates. Unfortunately at a time when markets are faltering, todays reading will be relatively hawkish when considering the monetary policy implications at the ECB.

Ahead of the open we expect the Dow Jones to open 2 points higher, at 18,145.

Author

Joshua Mahony MSTA

Joshua Mahony MSTA

Scope Markets

Joshua Mahony is Chief Markets Analyst at Scope Markets. Joshua has a particular focus on macro-economics and technical analysis, built up over his 11 years of experience as a market analyst across three brokers.

More from Joshua Mahony MSTA
Share:

Editor's Picks

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans. 

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.