Monday Meltdown | Forex Factory

  • Monday Meltdown

    From marctomarket.com

    Overview: Equities plunged, and yields sank as the coronavirus threatens a global recession. The oil price war signaled by Saudi Arabia and Russia aggravates the desperate situation. Equities markets in the Asia Pacific region slumped 3-7%. The Shanghai Composite was fell 3%. The Nikkei was off by 5%, and Australia was hit among the hardest with a 7.3% loss. Europe's Dow Jones Stoxx 600 gapped lower and had not reached a bottom in the morning session, and is off nearly 5.7% as this is written. US indices are hitting their opening limits (5% for the S&P 500). Benchmark yields are collapsing. The US 10-year yield is ... (full story)

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RossEdwards
Mar 9, 2020 7:41am
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This OPEC v Russia spat looks more like a Russia v US Shale war..
Remember Russia cosy up to OPEC+ deal which was good for US Shale.
Since the OPEC+ deal, Russia has become increasingly angry with Trump’s employing energy as a political and economic tool. Especially by U.S.’s use of sanctions to prevent the completion of Nord Stream 2. US also targeted Venezuelan interest of Russia’s state-oil producer Rosneft.
Just a Thought#
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Momofrmnyc
Mar 9, 2020 7:44am
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Quoting RossEdwards
This OPEC v Russia spat looks more like a Russia v US Shale war.. Remember Russia cosy up to OPEC+ deal which was good for US Shale. Since the OPEC+ deal, Russia has become increasingly angry with Trump’s employing energy as a political and economic tool. Especially by U.S.’s use of sanctions to prevent the completion of Nord Stream 2. US also targeted Venezuelan interest of Russia’s state-oil producer Rosneft. Just a Thought#
This is more spot on and I've also come to the realization this is more about wiping out those indebted U.S shale producers. They can't handle the prices being this low and may need some type of bail out if this last for a while. Russia can definitely stomach prices being this low. I see it as both sides picking up market shares with a destabilization tactic.
MarcChandler
Mar 9, 2020 12:10pm
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"But don't forget. Price Per Barrel * Number of Barrels Sold Per Day = Demand for USD
If you decrease the PPB you are effectively reducing the value of the Dollar. This is one factor in the total Global demand for the Dollar, but very important."

This is called the transactional demand for dollars, but it is rather small. Consider that average daily turnover in FX is around $6.6 trillion a day, according to the BIS. The dollar is on one side of more than 90% of the trades. World trade in a year is less than $30 trillion. That means in a week, fx turnover covers world trade for a year. And oil is a small fraction thereof. Bottom line--transactional demand for dollars related to oiil prices is relatively small in this context.
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Skracor247
Mar 9, 2020 8:54am
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It will probably hurt US oil interests.

But don't forget. Price Per Barrel * Number of Barrels Sold Per Day = Demand for USD
If you decrease the PPB you are effectively reducing the value of the Dollar. This is one factor in the total Global demand for the Dollar, but very important.
Reply
Banditten
Mar 9, 2020 7:15am
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Buy the dips
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ilhaner
Mar 9, 2020 8:36am
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Quoting RossEdwards
This OPEC v Russia spat looks more like a Russia v US Shale war..
Russian economy will probably fail way before US shale industry does.
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