The much-anticipated shutdown of the US government on Saturday did not trigger much of a knee-jerk reaction in Asian markets this morning despite the US index futures falling slightly.
Safe-havens namely Japanese yen and gold edged higher, showing market sentiment remains cautious amid uncertainties of how long it will take the Democrats and Republicans to find a common ground on immigration concessions in order for the government to resume operating.
The volatility index - VIX Feb contract is traded at around 12.0 area over the past five sessions. Historical studies show the Vix averages a return of 9.7 percent one week after a government shutdown, while the S&P 500 slips 0.3 percent during the same period.
Volatility Index – February 2018
Brent Oilprice slid for a fifth day to US$68.8 area this morning after the release of International Energy Agency (IEA) report saying ‘explosive’ growth from US Shale oil production in 2018 could dampen oil prices. The report also suggest ‘substantial gains’ in Canada and Brazil will also add to the supply woes.
Technically, Brent oil price seems to have entered into a technical correction with its immediate support at US$ 68.1 area (200% Fibonacci Extension level). Momentum indicators RSI and MACD have both shown signs of weakness, suggesting the bearish side is taking over control.
Separately, US Commercial Crude inventory dropped 6.86 million barrels last week, more than market forecast of 3.45 million drop. This marks the tenth straight week of stockpile decrease, which is likely to provide support to crude prices amid worries of rising production from the North America.
Crude Oil Brent - Cash
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