Crude oil and emerging markets draw attention as risk-off factors—"Key points and events schedule for April 22"

Following the day before yesterday, crude oil prices plummeted again yesterday.

The day before yesterday, it was due to a rush-selling and panic selling as contract deadlines approached, but yesterday's crude oil price drop occurred despite about a month left until the contract deadline, indicating that the intrinsic price of crude oil itself is falling.

The intrinsic decline in crude oil price and the price making new lows are leading to a risk-off sentiment.

Furthermore, due to this price plunge, responses from brokerage firms have been varied, with many margin calls and topping up of funds appearing to be occurring.

◎ Today's Points of Focus

1) Crude Oil Price

Yesterday again saw a plunge in crude oil prices, with the June WTI price briefly falling to $6.56 per barrel.

The United States, with President Trump, announced an increase in strategic reserves, and OPEC announced a meeting on May 10, but the price reaction was limited.

Oil is in surplus and showing unstable price movements.

If prices fall this far, oil-producing countries must be in a rather tough situation.

OPEC announced it will hold a meeting on May 10, but since there is no clear prospect of production cuts, the reaction is limited.

Another day of volatile price action is expected, so caution is needed for crude prices.

Also, be mindful of what statements oil-producing countries will make.

I summarized about crude oil price negatives in a video↓↓↓

2) Turkish Policy Rate

With the lira weakening, a policy rate decision is scheduled, and a rate cut of 0.25% is expected.

From an economic standpoint, a rate cut makes sense, but with the lira weakening, there is concern that cutting rates could accelerate the depreciation.

It seems the policy rate decision will have a limited impact on the exchange rate, but ongoing lira weakness could affect the forex market.

Pay attention to the level of the Turkish lira after the announcement.

3) Emerging Market Currencies

As crude oil prices fall, the Mexican peso is weakening.

The Turkish lira is making new lows, and emerging market currencies are generally soft.

Oil price declines, rumors about Kim Jong-un's health, and the coronavirus risk-off environment are drawing investment capital away and concentrating it in the dollar, contributing to emerging market currency weakness.

A weakness in EM currencies could lead to a default risk in emerging markets, and this could contribute to a global financial crisis.

Watch the levels of emerging market currencies closely.

◎ Today's Event Schedule

Wednesday, April 22

15:00 GBPUK CPI (Consumer Price Index)

18:00 EUR Lane & Bank of Finland President comments

20:00 TRYTurkish Policy Rate Announcement

21:30 CADCanada CPI (Consumer Price Index)

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