As we mentioned in one of the previous newsletters, the latest data from the Eurozone looks alarming. On Wednesday, no less terrible data was released on industrial production, which fell by 4.1% for the year. And all this against the background of the coronavirus story, which has not even begun in the EU yet. What will happen to the data in a month, when companies feel the rapid drop in orders from China?
The S&P500 chart of the day
Against this background, speculators have increased the maximum number of short positions on EUR since 2016. This is about futures contracts. As we know, such extreme values often end in a sharp price rise in the opposite direction. Short traders, especially those who use leverage, had to close their positions massively.
Despite everything, the German stock index finally managed to show new highs. A solid consolidation above the values shown as early as 2.5 years ago indicates that the German stock market will start accumulating new cash flows of investors who believe that the worst for the German economy is happening right now. This means that the normalization of the situation and a new growth cycle will begin.
During the day, oil grew by 4%, but declined slightly by the close of trading. A sharp positive came to the market as China reported the minimum daily number of new coronavirus cases since early February. Thanks to this news, investors got the hope that the decline in fuel demand in China may not be as strong as previously expected. And of course, closing short positions of speculators gave an additional impulse.
What’s waiting for us today?
01.15 Speech by Bank of Canada Governor Poloz
08.00 Consumer price index in Germany for January
14.30 US consumer price index in January
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