Oil hits year high

Fiona Cincotta CityIndex

FTSE heads lower at start of week

European stocks have started the week on a weaker note despite a strong close on Wall Street Friday and a rally in Asian stocks Monday morning. With the US and China seemingly within reach of a trade agreement and the Federal Reserve abandoning its tightening policy, US stocks are now not far off record highs.

US earnings season to show contractions

The litmus test of whether the rally in US stocks can be sustained will come with this earnings season which is expected to show the first set of corporate contractions in more than two years. JP Morgan Chase and Wells Fargo will kick off the reporting season Friday followed by Citigroup early next week when corporate reports will start flooding in in earnest.

The Fed is also likely to continue steering a supportive course for the US economy, even more so because President Trump has criticised the central bank and its chairman over last year’s rate hikes. Though technically independent, the balance in the Fed has been slowly shifting as Trump has nominated new candidates to the board of the central bank and the process is still ongoing with Trump’s latest nomination. The Fed’s last policy meeting minutes will be released Wednesday but are not expected to hold many surprises as the bank has already signalled that there will be no more hikes this year.

Oil hits year high

Brent crude has breached $70/bbl, trading at the highest level this year as tensions in Libya escalated resulting in 21 people killed and as many wounded. The turmoil in the oil-rich North African country is adding to the already tightening oil market where supplies are curtailed because of OPEC production cuts and US sanctions on Iran and Venezuela. US-traded WTI is also higher but far behind at $63.5 as the US remains well-supplied with its own production.

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Fiona Cincotta

CityIndex

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

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 climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

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.