In a quiet currency session ahead of a busy week of data, the euro grinded higher since bottoming early this morning. The U.S. Federal Budget Balance came in a little lighter than expected and this put pressure on the dollar late in the session. Today was a very quiet inside session for the yen ahead of PPI data tonight at 5:50 p.m. Central.
After a strong start to the week for U.S. equities, continued pressure in Japan is holding back the risk appetite globally. The Nikkei is down 12% from its January high and while the cash index is down .65% on the session the futures have shed more than 3% from yesterday’s 4:00 p.m. Central close.
Crude oil hedge funds continue to run for the exits and are in part responsible for yesterday’s late-day swoon. Yet, despite market turmoil, the supply versus demand fundamentals for oil continue to be very bullish. Even the International Energy Agency (IEA), that hates to say anything bullish about oil, is acknowledging that despite their prior doubts that OPEC and their Non-OPEC coconspirators have succeeded in removing the global oil glut.
After a year of record closing highs and little to no volatility, it was expected that the stock market would need to blow off some steam. Last Monday, the CBOE Volatility Index, or VIX, surged nearly 116%, its biggest one-day increase since at least 2000.