Monday: 5 Things The Markets Are Talking About

Chinese manufacturing slumps, commodities drop and U.S. presidential contenders face first real test in Iowa. Here are some of the things people in markets are talking about today.

1. China manufacturing

China’s official factory gauge fell to a three-year low of 49.4 in January, the measure’s sixth straight month of deterioration and below the median estimate of 49.6 in a Bloomberg survey of economists. The Shanghai Composite Index closed 1.8 percent lower, extending its loss this year to 24 percent following its steepest monthly decline since the financial crisis. The offshore yuan dropped the most in a week as speculation over the future direction of the currency heats up.

2. Europe PMIs

In its monthly manufacturing report, Markit Economics said price pressures “remained on the downside” in the euro area, highlighting continued deflationary risks in the common currency area. The headline Purchasing Managers’ Index fell to 52.3 from 53.2. In the U.K. manufacturing PMI unexpectedly rose to a three-month high of 52.9 in January. Manufacturing PMIs for the U.S. are due later today.

3. Oil down, gold up

Oil’s recent rally faltered following the China manufacturing release and data showing OPEC pumped a record amount of crude last month. West Texas Intermediate for March delivery dropped as much as 93 cents to $32.69 a barrel on the New York Mercantile Exchange and was at $33.19 at 11:15 a.m. London time. Hedge funds increased bullish oil bets by the most since 2010 as prices climbed in recent sessions. Gold climbed $5 an ounce to $1.123.22 at 11:15 a.m. in London.

4. Big three take the month off

There are no central bank meetings in the U.S., Japan, or the euro zone this month as global bond yields hit 12-month lows and Japanese yields fall to records. No meetings does not mean no communication, with ECB president Mario Draghi due to speak to the European Parliament later today and board member Benoit Coeure already suggesting the central bank may reconsider its policy stance at March meeting. The Bank of England is due to meet on Thursday, with Mark Carney looking increasingly likely to become the first governor since 1949 to complete his tenure without ever changing rates.

5. Iowa

In the final hours ahead of the first votes being cast in the U.S. presidential election campaign the three leading Republican candidates intensified attacks on each other. In the final Iowa poll ahead of the caucuses, Donald Trump overtook Ted Cruz with 28 percent to Cruz’s 23 percent. On the Democratic side, Clinton holds the lead over challenger Sanders, with analysts saying turnout will be key for her chances.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell