Forex news from the European morning session 26 Jan

News:

  • Kuwait says OPEC is looking for effective ways to stabilize oil market
  • Oil price rallies as Iraq says they would be willing to cut output if others do
  • Carney repeats that conditions not in place for a UK rate hike
  • Japan's Abe says government and BOJ will work together to beat deflation
  • Japans Abe says he has no intention of dissolving parliament
  • Japan's Hayashi says BOJ has less room than others to ease policy
  • Carney not ready just yet to make a decision on extending time at BOE
  • BOE's Furse says UK seeing modest credit growth
  • China's economic fundamentals remain sound
  • China's economy will be a source of stability not risk
  • Fitch revises New Zealand outlook lower to Stable from Positive
  • BOE's Bailey to head UK's financial regulatory body
  • China crude oil imports from Russia on the rise again
  • Option expiries 10am NY cut today 26 Jan

Data:

  • Switzerland trade balance Dec CHF +2.54bln vs +2.9bln exp
  • Shanghai Composite Index closes down -6.4% at 2,749.79
  • Nikkei 225 closes down -2.35% at 16,708.90

It's been all about oil again as the black stuff continues to leave its sticky prints all over the market.

Chinese equity markets closed down 6.4% and that fed through to early Europe. The euro needed little invitation to rally accelerated by further losses in oil price.

EURUSD posted 1.0873 dragging euro pairs with and forcing the reverse action in core pairs. AUDUSD fell to 0.6920 on the EURAUD demand and similarly GBPUSD dropped to test 1.4170 on the EURGBP rally to 0.7664.

USDJPY fell to 117.65 in a move followed on from the softer Nikkei close and that helped contain EURJPY ranges.

Cue talk of oil output cut following on from Kuwaiti noises about OPEC action and we saw oil rally sharply with Brent posting $31.05 from $29.27 and WTI $30.85 from $29.25. Equity markets followed suit and we saw the euro in retreat and USDJPY fly up through 118.30.

EURUSD has been below 1.0820 with EURGBP down testing 0.7600 support sending GBPUSD rapidly back through 1.4200 to post 1.4240.Similar reversals were seen in other currencies with USDCAB retreating to 1.4193 from 1.4237 and AUDUSD rallying back above 0.6980

Busy times with markets barely pausing for breath as the FOMC shadow looms ever larger.