Forex news for US trading on January 28, 2016:

News:

  • December US durable goods orders -5.1% vs -0.6% exp m/m
  • US initial jobless claims data 278k vs 282k exp
  • South Africa hikes repo rate 50 bps to 6.75%
  • Baker Hughes: Global oil rigs could fall by as much as 30% in 2016
  • CIBC downgrades Canadian growth estimate, sees late-year CAD rebound
  • ECB Weidmann: See ECB bond purchasing program close to money printing
  • Despite a spat over lunch, France signs accords worth €15bn with Iran
  • Kansas City Fed manufacturing index -9 vs -10 expected
  • Latest Atlanta Fed's GDPNow rises to 1.0% from 0.70% for Q4 2015
  • US Dec pending home sales +0.1% vs +0.9% m/m exp
  • January 2016 German HICP flash 0.4% vs 0.4% exp y/y

The OPEC saga:

  • Russian oil minister says Saudis proposed each country cut production by up to 5%
  • No firm agreement on OPEC and Non-OPEC energy minister meeting says Russia
  • Gulf OPEC delegate: Gulf OPEC countries are willing to cooperate on any oil action
  • Iran wants to recoup market share, is a challenge to any OPEC deal
  • 5% oil production cut proposal to include all oil producers - Novak
  • Cut output 5%? What proposal to cut output 5%
  • Senior Gulf OPEC delegate: No Saudi proposal to cut output by 5%

Markets:

  • Gold down $10.45 to $1114
  • WTI Crude up $1.47 to $33.77
  • US 10-year yields down 2 bps to 1.98%
  • GBP leads, JPY lags

I don't know where to start with the OPEC drama. Russia started talking about a meeting that hadn't been agreed to and some fantasies about every OPEC and non-OPEC oil producer cutting production by 5% and the market ate it up. Crude rocketed to $34.82 as the squeeze continued and USD/CAD dropped 150 pips from the US open to 1.3948.

The move abruptly ended when an unnamed delegate stated the obvious in that Iran wasn't going to play along. Nevermind about a dozen other countries. Nevermind that OPEC countries don't follow quotas anyway.

Crude fell back below $33 and USD/CAD rallied all the way back to 1.4100. Psychologically, the oil bears seem to have decided they've had enough and covered, sending crude up to $33.76 late. USD/CAD finished at 1.4037.

The rest of the market got caught in the oil chop as well as a few other mystery chops that left everyone feeling like they were looking for a headline that wasn't there. Risk trades struggled and rebounded a handful of times and that boosted the euro as carry trades bailed.

Cable also caught a good bid as it tries to carve out a bottom near 1.42. GBP/USD rose above 1.44 briefly before peeling back to $1.4352.

The dislocations and strange swings in sentiment ultimately undermine investor confidence. It's the kind of volatility that creates contempt and will fuel the discontent that's been in high gear since the start of the year. Data like the durable goods report won't help either.