Oil’s longest upward streak halts as China’s industry sector keeps slowing down and OPEC maintains high pumping volumes despite global surplus.
WTI declined by 2.56% to the 32.76 level after disappointing manufacturing data from China and unconfirmed statements of Russian Minister of Energy, Novak, claiming that Russia and Saudi Arabia are going for a deal on setting the production quota.
China’s January PMI report showed 49.4 points, missing the expectations of 49.6 points, reflecting the efforts of Chinese government to curb excessive manufacturing facilities. This is the biggest decline in China’s manufacturing activity since June 2012. Chinese non-manufacturing PMI also declined by 0.9 points from 54.4 to 53.5, signaling that the services sector might go into a free fall due to a long-lasting stock market decline and devaluated Yuan. Caixin PMI report numbers have beat the estimates (48.4 versus 48.1), which indicates that January’s recession in manufacturing is less intense than the one in December, however it is still far from looking good. ShComp responded with a decline of 1.8%. Other Asian stocks were trading in green, Nikkei grew by 1.98%, Topix 500 index gained 2.14%.
Industrial sector in the U.K. brightens up in January according to the Markit Manufacturing PMI report. The numbers exceeded the estimates by 1.3 points: 52.9 versus 51.6 consensus. The news boosted the Pound against USD: GBP/USD gained 0.5% breaking the 1.43 level then returning back to 1.4280.
EUR/USD is growing steadily today as investors are retreating from bidding on USD ahead of the ISM Manufacturing and Personal Consumption Expenditure reports, which will probably expose a negative aftermath of tightened monetary policy.
USD/RUB achieves moderate gains today trading slightly above the 76 level. Oil’s drop has not sent RUB in a nosedive this time as increased Ruble bids from hedge funds render additional support for the Russian currency. However, further Oil drop may cause investors to quit bullish Ruble positions resulting in the currency’s sharp drop back to the 80 level.
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