- U.S. Jan factory orders up by 1.2% vs. 1.1% forecast
- Potential extension of OPEC output cut to second half of 2017?
- Australia AIG construction index up from 47.7 to 53.1
After a topsy-turvy London trading session, forex price action calmed down as U.S. traders joined the game and there were no major reports released.
Iraq to join OPEC output cut? – It looks like Iraq wants to keep playing along with its oil cartel buddies as oil minister Jabbar Al-Luaibi was quoted saying that they might commit to more cuts if the production deal is extended until the second half of this year.
“It will depend on oil prices and market stability. If OPEC decides [on] cuts, then Iraq will cut,” he said. Recall that Iraq initially sought exemption from the OPEC output deal signed back in November last year, arguing that they needed additional revenues to fund the war against the Islamic State. However, they eventually gave in to cut 210,000 barrels per day so the deal could push through.
The oil minister also noted that Iraq is somewhat satisfied with the effect of the output cut on crude oil prices so far but added that it’s still too early to decide if the policy should be continued. The International Energy Agency projected that Iraq will remain the OPEC’s second-largest producer, reaching 5.4 million barrels per day in production by 2022.
Upbeat factory orders data – The only report released by Uncle Sam was the January factory orders report, which came in a notch better than expected at 1.2% versus the 1.1% forecast. This marks the second consecutive monthly increase in factory orders, signaling a likely pickup in production activity as manufacturers try to fill these orders.
On a year-over-year basis, this amounts to a 5.5% gain in factory orders, buoyed by a 0.2% uptick in total shipments of manufactured goods. Note that manufacturing accounts for 12% of overall economic activity in the U.S. and that this sector is getting support from a pickup in energy prices and expectations of tax reform from the Trump administration.
Major Market Movers:
EUR – The euro continued to bleed against its peers, following reports that Juppe will no longer be running for President.
EUR/USD slid from 1.0602 to a low of 1.0576, EUR/JPY is down from 120.87 to a low of 120.39, EUR/GBP dropped from .8658 to .8640, and EUR/CAD retreated to 1.4175.
- 3:30 am GMT: RBA interest rate decision (Read Forex Gump’s Trading Guide!)
- 5:00 am GMT: BOJ core CPI (0.1% previous)
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