Day 2 in Davos, and President Trump as expected stole headlines with promises of bigger and better trade deals with the US’s biggest trading partners. With Phase 1 of the deal with China agreed, Trump spoke about the opportunities which could follow. The UK (post Brexit) and the EU the main partners mentioned. As a result we saw some volatility in EURUSD, FTSE 100 and the DAX. EURUSD being on the biggest movers initially bouncing from its $1.11 support point, reaching a 7-day high, before reverting back to it’s open price, forming a doji of uncertainty as a result.
Looking past the above, and with 2 days left of the World Economic Forum, could there be further moves yet to happen as the agenda and discussions in Davos heighten?
The Future of Financial Markets panel is always a highlight at Davos. Wednesday see’s the likes of Sajid Javid, UK Chancellor of the exchequer, Steve Mnuchin, Secretary of the US treasury along with a host of other key names in financial markets discussing the topic as it pertains to their own economies as well as forecasting what’s to come globally.
Market to Watch – FTSE 100
The FTSE will be one to keep an eye on, as with Brexit finally positioned to happen, it will be interesting to hear the panel outline their beliefs on how the UK will fair post it’s separation from the EU. After today’s speech from Trump, we saw what was initially a bearing day for the UK index turn bullish, bouncing from it’s 7544 floor, going as high as 7613. Could tomorrow’s discussions see this momentum continue, or could a gloomy outlook from the panel lead to the potential for a breakout in bearish territory below 7500?
The panel on the “global energy challenge” is another must see discussion, especially as it relates to the value of Crude Oil. The President and CEO of Saudi Aramco, Amin H. Nasser is the headline name set to appear and discuss the topic, with the rise in tensions within the middle-east and recent IPO set to be on the agenda.
Market to Watch – Crude Oil
From reaching $65 after the US tensions with Iran heightened, Crude swiftly fell back to $58 as those same tensions de-escalated. However with those underlying issues still on the table, many believe it’s a matter of when and not if we see further events of hostility take place. Thursday will be interesting to hear the perspective of Aramco, who is the world’s largest Oil producer. With the recent IPO, could these tension, and potential for price hikes benefit their bottom line, and if so, is this sustainable?
Crude currently sits at the $58 as it failed to break out of this support point. The volumes in the market also suggest there is more weakness than strength. The technicals suggest further runs back to $63 – $65 per barrel, Thursday could assist in that move being realised.