Stock markets stepped into 2017 with style as the bullish combination of upbeat data from China, rising oil prices and the New Year effect elevated global sentiment. Asian shares glided higher during trading on Tuesday while European markets were boosted by the FTSE100 which hit fresh all-time highs above the 7200 mark. With the impressive start in Asian and European markets reviving investor risk appetite, Wall Street could be expected to explode into gains during trading this week. With themes such as a strengthening Dollar, oil price sensitivity and events in Europe sparking extreme levels of volatility this quarter, investors may be in-store for another roller-coaster ride.

Oil bulls make a move

Oil prices may remain buoyed in the short term as the prospects of major oil producers trimming oil production by nearly 1.8 million barrels a day re-attracts investor attraction towards the commodity. With prices already rushing to 18 month highs during trading on Tuesday one can see how the expectations of a production cut continues to provide a lifeline to the commodity. While the current gains in oil are undeniably impressive, gains are at risk of being limited if any complications or delays arise from the proposed cut deal. Investors may pay extra attention to the global supply of oil with any indication of output failing to recede reigniting the oversupply fears. From a technical standpoint, any weakness below $52 on WTI could open a path lower towards $50.

Sterling bears on standby

The fact that Sterling bears maintained some dominance following December’s impressive UK manufacturing PMI of 56.1 continues to highlight how the Brexit woes have infected the Pound. Sterling ended 2016 as a loser amongst other major currencies with the negative Brexit momentum potentially capping upside gains this quarter. With uncertainty remaining the engine behind Sterling losses, further weakness should be expected as anxiety heightens ahead of the EU exit negotiations. From a technical standpoint, the GBPUSD is bearish on the daily charts and a breakdown below 1.2300 could open a path lower towards 1.2200.