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Oil Rally Continues Sans Rumor Drive, ECB A Euro Risk Ahead

Oil Rally Continues Sans Rumor Drive, ECB A Euro Risk Ahead

2016-04-21 02:25:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

  • US Oil prices surged to five-month highs even as the rumor mill seemed to provide an even platform
  • Top event risk in the upcoming session is the ECB rate decision - on which the market is troublingly complacent
  • A tentative dollar rebound lacks catalyst and the risk drift pushes the issue of equities' stability

    Having trouble trading in the FX markets? This may be why.

    There were corrections, trend extensions and even a few breaks this past session, but conviction is still in short supply. From risk trends forging new multi-month highs for the S&P 500 and Dow to the USDollar's attempt to rebound from 10-month lows, there was limited motivation to promise extended trends through the coming 48 hours. Risk appetite seems to be moving away from recovery phase to one where we see how far complacency can lift us. That does not provide much promise for the position traders and leave the tactical-minded waiting for a turn. A surge from crude oil prices didn't clearly conform to the recent 'motivation from speculation' formula. For the Greenback, the rebound was broad but uneven. Without a key spark to rally around, the EURUSD, GBPUSD and USDJPY moves are equally pained for pressing their respective reversals. What's more, the data ahead offers relatively little fuel to either a clear sentiment move or Dollar bearing. One piece of event risk sticks out, however: the ECB rate decision. While their dramatic move in March likely renders the group inactive at this meeting, the exceptionally low implied volatility exposes a dangerous complacency. We look at what it will take to keep these market moving - or simply revive them - in today's Trading Video.

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