Market Review, April 28, 2016

Yesterday we saw the dollar move lower against the other major currencies even though U.S. data beat expectations. The sentiment on the dollar remained weak awaiting the Fed’s policy statement that was due later in the evening.

After the Fed held interest rates steady yesterday night, we saw the USD extend its losses. Any rate hike by the Fed this year is viewed bullish for the dollar and bearish for gold.

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the FOMC said in the policy statement. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Investors were also waiting on the conclusion of the BoJ’s policy meeting about further easing measures.

Overnight the yen soared as the BoJ held off on expanding monetary stimulus as Governor Kuroda decided to take more time to assess the impact of the negative interest rates. This came as a surprise as everyone was expecting for the central bank to take action on the strengthening in the yen. Right after the decision the yen rallied while stocks tumbled.

As investors were awaiting the release of the Fed’s latest monetary policy statement, gold extended its gains.

Crude inventories data were optimistic, pushing oil prices higher. Fed’s decision on rate changes also pushed further higher, hitting new peaks for 2016.

USD/CAD hit 1.2575 during the U.S. trading session, the pair’s lowest since July. The commodity currency remains supported by the climbing oil prices.

Wall Street ended slightly higher after the Fed’s rate decision, but was weighed by Apple shares.

 
USDJPY

Market Review, April 27, 2016

The dollar was extremely weak yesterday against the other major currencies, and this after the release of disappointing U.S. data.

Investors are waiting for today’s Fed policy statement to hint on the pace and timing of future rate hikes, causing them to be cautious of the dollar.

Commodity currencies were very strong yesterday, boosted by a strong bounce back in oil prices and a weaker U.S. dollar.

BoC Governor Poloz said yesterday that the global economy is still facing severe instabilities which supported the use of low interest rates. Furthermore he did add that he believes that the global economy is on the right way to recovery, though at a slow pace.

Even though oil prices went up yesterday, there are still concerns over global oil supply glut are still valid, Iran, Saudi Arabia and Kuwait all announced output increase. Today we have the inventories data that will show us what the current situation is on the stockpile.

Although U.S. data came out less than expected, gold had a hard time to find a strong bullish momentum as investors are cautious before the Fed meeting.

U.S. stocks were mixed yesterday, we saw gains in oil and gas, basic materials and industrials sector and losses in healthcare, technology and telecoms sectors which pushed stocks lower. After the bell we saw the NASDAQ add to its losses following a more than 6% fall in Apple’s shares after the companies’ earnings reports were below expectations.

Today we are all waiting for the monetary policy statement by the Federal Open Market Committee to shed further light on towards what direction they are leaning towards on the rate decision.

APPLE

Market Review, April 26, 2016

Yesterday we saw the dollar fall against other major currencies as investors were on standby for the U.S. new home sales data release.

Furthermore, the sentiment on the dollar remains shady ahead of the Federal Reserve’s policy meeting this week on Wednesday, where investors are awaiting further indications on the pace and the timing of future rate hikes. After the weak U.S. housing data that was published yesterday, the dollar remained broadly lower.

The GBP strengthened after U.S. President Barack Obama warned that a Brexit will not be favorable as it will take years to strike a trade deal with the U.S. if Britain left the EU. This eased investor’s minds, as the statements of the U.S. president might persuade voters to vote against a Brexit and thus take away the uncertainties around the side effects of a possible Brexit.

On Friday the yen suffered from major losses which were triggered by Bloomberg report that the Bank of Japan is considering applying negative rates to its lending program for financial institutions. Yesterday, the yen recovered some of these losses as investors are expecting the BoJ will issue further easing of monetary policy in a bid to halt the currency’s rise.

Oil prices regained ground by the end of the day, after dropping in earlier session because of traders cashing in on last week’s rallies. Investors are waiting for the API weekly crude oil stock data coming out today and tomorrow’s inventory data to shed further light on current output.

As the dollar was weak, gold rallied sharply and erased some of its losses from the massive sell-off from late last week.

Wall Street closed slightly lower yesterday due to the energy shares pared with weak earnings from companies including Perrigo that was down 18% and Xerox shares that tumbled 13.3%.

Today we are looking at Apple to publish their quarterly earnings.

  • Interesting articles to read: BREXIT

BREXIT

Market Review, April 25, 2016

On Friday we saw the EUR/USD fall as the effect of Mario Draghi’s comments of further interest rate cuts by the ECB in the coming months, were still playing on foreign exchange traders. The pair was down 0.56% on the session.

The dollar also outperformed the yen on Friday, on a report that Bank of Japan is likely to approve further monetary policy easing. BoJ is considering expanding its negative rate policy to bank loans and could cut rates further.

On the commodities front, oil prices rose as market sentiment turned even more bullish due to signs that persisting global supply glut may be easing. Despite rallies, oil markets remain oversupplied as between 1 and 2 million barrels of crude are being pumped out every day in excess.

Gold fell sharply as the dollar surged high weighing on the precious metal. Despite the losses on Friday, gold is still up more than 16% since the start of the year.

Wall Street closed flat on Friday after the disappointing quarterly reports from Microsoft and Alphabet pushed tech stocks down, minimizing the effect of the bullish energy shares.

 

USDYEN

Market review, April 22, 2016

Yesterday ECB president Mario Draghi’s statement that the bank stands ready to use “all instruments available”, including further interest rate cut to ensure the inflation rate returns to its target resulted in the euro pulling back from sessions high.

Draghi’s statements, paired with a mixed bag of U.S. economic reports, enabled the dollar to regain some of its losses against the other major currencies. Initial jobless claims data came out better than expected but the data of from the Fed wasn’t as good.

All data from the U.K. came much worse than expected.

Commodity currencies strengthened as oil pushed higher as IEA expects market to rebalance and oil producers are open to discuss output freeze at June meeting.

Silver and gold both surged higher, though gold proved to be stronger yesterday.

Yesterday’s earnings report for Alphabet and Microsoft were not as expected and they both fell sharply! Alphabet dropped 5.5% and Microsoft 3.5%.

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Market Review, April 21, 2016

Yesterday we saw the dollar erase losses it has recently experienced, against the other major currencies. This was after U.S. existing home sales rose far more than expected last month. This overshadowed Tuesday’s disappointing housing sector reports.

Oil prices surged to a new 2016 high after the U.S. inventory report showed a modest build. WTI crude for June traded in range between $41.30 and $44.24 a barrel and then settled at $44.12. The outcome of the inventory report eased ongoing concerns about the excessive supply glut on global energy markets.

During the course of the day gold tried to push higher but closer to the end of the day, it was unable to and gave up its early gains as the U.S. dollar surged after the U.S. existing home sales were better than expected. Gold prices are still proving to be strong with lots of potential. This year gold has risen almost 18% already.

Silver on the other hand, rose to 11-month highs – has gained 23% this year, so far.

Coca-Cola dropped more than 4% yesterday after reporting its 4th consecutive quarter of sales decline. Intel rose around 1.5% after the earnings reports were in line with the forecast.

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Market Review, April 20, 2016

Yesterday was filled with unexpected turn of events.

Although the Doha meeting on Sunday proved to be unsuccessful and no agreement was reached on the output freeze, oil prices recovered on Monday and continued to push higher yesterday! WTI crude settled at $42.38, up 2.89% on the session.

Apparently, the fact that Kuwait’s oil union is still on strike, makes the oil prices jump up even though this is only a temporary setback and doesn’t mean that major oil producers have agreed on a cutback of production.

Kuwait oil and gas workers have said that they will carry on with the strike until planned public sector pay cuts are cancelled. They fear that their salaries, benefits and staff layout will be part of the planned public sector pay cuts.

Kuwait’s acting oil minister Anas al-Selah said during an interview with Kuwaiti Tv channel al-Rai that production will continue and that no talks would proceed during a strike. “We cannot sit down at the negotiating table with the union during a strike. We will achieve the impossible to continue to operate the oil sector despite the strike”.

Adding to that, Iranian officials said that its production could return to pre-sanction levels in two months, indicating that in time they might be willing to re-spark talks about freezing output at next meeting in June.

In Asia, crude oil prices fell after yesterday’s API report showed larger than expected build in stockpile last week, though refined product levels dipped – giving a mixed supply picture.

Today we are awaiting on the inventories data to shed some “real” light on the current situation.

The commodity currencies were obviously immediately effected by yesterday’s oil prices gains. AUD and CAD were strong against the dollar, who was effected not only by the surge in oil prices but also because of soft housing data which weighed heavily on the economic sentiment, pulling the USD to near 8-month lows.

Gold surged yesterday more than $25/ounce. Gold is on pace for one of its strongest opening halves in more than a decade.

*** It has now been reported the Kuwaiti oil worker’s strike has ended.***

The S&P 500 was near record highs yesterday, lifted by energy stocks and a solid quarterly report from Johnson & Johnson.

USOIL

Market Review, April 19th, 2016

Yesterday we saw the dollar remain broadly lower against other major currencies as markets were still uneasy about the failed agreement between major oil producers on an output freeze, together with Friday’s gloomy U.S. data.

The yen held at 108.87. The strong yen is a challenge for the BoJ as it is attempting to shore up inflation and the warning of Japanese officials to stop being one-sided on the yen, has failed to prove effective for now.

Yesterday we all felt the aftermath of the global oil agreement that never came to be. Eighteen countries gathered on Sunday to discuss the huge global glut. Iran refused to attend the meeting as it has long said it will not freeze production until it regains market share following the lifting of the sanctions. As other issues arose, the OPEC and non-OPEC members were unable to reach a consensus and we saw oil prices take a plunge as low as $37.60 during an overnight sell-off.

The failure of the meeting revived industry fears that oil prices will remain persistently low in the near-term future.

Yet, somehow, yesterday oil pared most of its losses from the overnight trading. This was shortly after Kuwait reported that output hovered around 1M barrels/day, as producers took roughly 1.5M barrels offline in response to a strike of thousands of workers over the weekend. Officials from the Kuwait National Petroleum Co. (KNPC) told the Al-Arabiya television network in Dubai that they expect production to return to average levels before the end of the week.

“We expect a big increase in crude inventory in the coming days and we have enough stocks for export and we have no fears of a stoppage of any shipment”, he added.

Gold inched down yesterday as investors reacted pessimistic, on most markets, to bearish news in global energy markets after the meeting in Qatar ended without an agreement being reached.

IBM reported its worst quarterly revenue in 14 years, shares went down nearly 5% in extended trading.

Nextflix earnings report was double than expected, but subscribers forecast missed estimates causing shares to plunge 8% in after-hours trading.

Interesting articles:
– BoJ

– IBM earnings report

– Netflix earnings report

USOIL

Market Review, April 18th, 2016

On Friday we saw dollar lose its strength after the release of disappointing U.S. economic reports which re-sparked concerns over the stability of the economy. The downbeat data dampened demand for the greenback.

The Euro was stronger against the dollar and the pound. It gained 0.41% against the USD and 0.21% against the GBP.

USD/JPY renewed its previous descend and is now again at 108 levels.

Gold prices moved higher as the dollar weakened and after upbeat data from China eased concerns over slowdown in the world’s biggest gold consumer.

Oil prices tumbled as investors were on standby ahead of Doha summit.

Over the weekend, before yesterday’s Doha meeting, there were a lot of headlines around the decisions that would be reached during the meeting between OPEC and non-OPEC members about freezing oil output at January levels until October 2016.

Iran said it will not attend the meeting, adding they support the freeze but would not join it until it raises its output and market share to their pre-sanctions levels. Reuters poll of oil analysts showed this week that a rise in Iran’s oil output will undermine efforts to re-balance the market in 2016.

Saudi Arabia mentioned it will only freeze the level of its oil production if all major producers, including Iran, do so. Saudi deputy crown prince Mohammed Bin Salman said during an interview with Bloomberg. He added that OPEC and non-OPEC members should accept the reality of Iran’s return to the oil market and that if Iran freezes its oil production at the February level, it means it cannot benefit from the lifting of sanctions.

The freeze proposal has helped oil prices go up over 60% despite little change in supply.

Yesterday was the biggest fail when talks to freeze crude oil output didn’t lead anywhere and no agreement was reached. We are already seeing the effect on oil prices. This morning the price is around $38.30.

Article following Doha meeting: WSJ – No agreement on Oil freeze.

This week we are focusing on data from API and at the weekly government report on stockpiles.

DOHA

Market Review, April 15th, 2016

Yesterday we received some mixed reports about the U.S. economy which made investors lose their morning positive market sentiment. But this wasn’t for long… Investors soon shrugged off the signals and the dollar moved back up towards two-and-a-half week highs against other major currencies. The economic data bolstered support for a June rate hike from the Fed, having a bullish effect on the dollar.

There was also a positive reaction when Singapore Central Bank approved further easing measures to boost low core inflation. This caused a sell-off in the Chinese yuan and boosted the dollar.

Bank of England’s monetary policy committee held the benchmark interest rate at 0.5%.

We saw the oil hold strong yesterday until the evening when all of the sudden skepticism was heightened after IEA (International Energy Agency) expressed doubt about whether any agreement between the OPEC and Non-OPEC members will have significant effect on global supply.

Gold fell sharply after Singapore Central Bank unexpectedly declared easing measures which boosted the dollar up and consequently pushed gold prices down.

Article about Singapore Central Banks unexpected decision: Singapore CB

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