Brent Closes in on $30, Central Banks in Focus

European indices are expected to open marginally lower on Tuesday, as investors remain cautious following a rough first week of trading to start the new year.

There are signs that markets are finding their feet again, with China’s Yuan remaining somewhat stable for a third session which appears to have finally brought some calm to Chinese equity markets. Of course, this could just be the calm before the storm which is why we may see investors proceed with caution in the next couple of days.

Oil prices may continue to act as a drag on sentiment in the meantime, having tumbled again at the start of the week. Brent crude is already down around 3.5% on the session on Tuesday and looks likely to test the markets appetite for sub-$30 prices. While I find it extremely difficult to build a bullish case for Brent at this time, it should be noted that it is currently on course for a seventh consecutive session of losses, during which time it has lost around 20% of its value. With that in mind, I wouldn’t be surprised to see some profit-taking at the psychologically important $30 level.

Brent Daily

Also on investors’ minds today will be the numerous speeches from key central bank officials at the “Farewell Symposium for Christian Noyer” in Paris. This morning we’ll hear from Bank of Japan Governor Haruhiko Kuroda and Federal Reserve Vice Chair Stanley Fischer on “Monetary Policy, Financial Stability, and the Zero Lower Bound”, while this afternoon Bank of England Governor Mark Carney will take part in a panel discussion titled “Legacy for Business Models and Financial Stability”. Needless to say, with so many senior central bank officials – all of which are expected to be very active this year – speaking in one place, it will be well worth monitoring the comments coming from this event. We could well see some reactions in the markets to what is said.

We’ll also get some manufacturing and production data from the U.K. this morning, followed by the NIESR GDP estimate for the fourth quarter this afternoon. This will be accompanied by JOLTS job openings data from the U.S. – an important indicator of job creation.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.