Hope it drops sooner, this is just a simple clonage within this long term channel. Fundamental factors to consider, oil dropping further, BOC lowering interest rates this week, could wick out to 1.48. US bad data last minute revised GDP after market closed last Friday 1/15, if USD starts dropping this pair could just go sideways for a few weeks.
The risk for loan defaults for the shale industry due to low oil prices are very high and has the Fed's attention, supposedly they have removed the mark to market rule for energy assets last Friday 1/15, allowing for these companies and banks to adjust their balance sheets accordingly so their borrowing bases do not cross below their existing debt. A similar situation occurred in 2008 onward with MBS, with the housing industry, allowing for home loans mark to market requirement to be removed, instantly making everything ok on paper (assets revalued back to date of origination instead of current market price)
The point being, their could be a program similar to QE solving all of these energy companies, banks and sovereigns currencies problems with more money printing and purchasing oil futures and similar assets like energy stocks, such as the case with Mortgage Backed Securities Fed bailout. Not sure if the Fed's balance sheet could handle all of the new asset purchases, some member of the BIS network would be able to absorb the purchases on their balance sheet, maybe ECB, like a big QE rotation, or maybe they will just start a war, who knows. Oil needs to go back up or there will be a lot of problems. Not sure if the over supply could be bought up with policy moves, but who knows, just my loony tunes analysis :p
The risk for loan defaults for the shale industry due to low oil prices are very high and has the Fed's attention, supposedly they have removed the mark to market rule for energy assets last Friday 1/15, allowing for these companies and banks to adjust their balance sheets accordingly so their borrowing bases do not cross below their existing debt. A similar situation occurred in 2008 onward with MBS, with the housing industry, allowing for home loans mark to market requirement to be removed, instantly making everything ok on paper (assets revalued back to date of origination instead of current market price)
The point being, their could be a program similar to QE solving all of these energy companies, banks and sovereigns currencies problems with more money printing and purchasing oil futures and similar assets like energy stocks, such as the case with Mortgage Backed Securities Fed bailout. Not sure if the Fed's balance sheet could handle all of the new asset purchases, some member of the BIS network would be able to absorb the purchases on their balance sheet, maybe ECB, like a big QE rotation, or maybe they will just start a war, who knows. Oil needs to go back up or there will be a lot of problems. Not sure if the over supply could be bought up with policy moves, but who knows, just my loony tunes analysis :p