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Market Review, July 29, 2016

Yesterday the  dollar continued to hover at two-week lows against the other major currencies, after the release of disappointing U.S. jobless claims data and as the Federal Reserve’s decision to leave its monetary policy unchanged continued to weigh on the greenback.

USD/JPY, on the other hand, pared sharp losses, as investors received a full day to digest the Fed decision ahead of a meeting from the BoJ to close the week.

The Yen initially soared against the Dollar, amid signals that the Bank of Japan could fail to meet market expectations by approving only moderate easing measures at a highly-anticipated meeting on Friday. While Abe unveiled a broad ¥28 trillion stimulus plan on Wednesday, Reuters reported that the Japanese government may only provide as much as ¥7 trillion in direct fiscal stimulus.

If Abe is unable to deliver on promises of jumpstarting the economy with a broad stimulus initiative, the Japanese Central Bank could feel added pressure to lower interest rates deeper into negative territory. The Yen has gained nearly 13% against the U.S. Dollar year-to-date.

During the Asian session the safe-haven yen jumped against the dollar after the Bank of Japan’s monetary policy easing disappointed investors who had been hoping for more radical stimulus measures.

Gold settled at $1,341.65, up 0.54% on the session. Gold spiked in Wednesday’s after-hour session after the Federal Open Market Committee (FOMC) left its benchmark Federal Funds Rate unchanged at a level between 0.25 and 0.50% at the conclusion of its July monetary policy meeting. Despite noting that near term risks to the economic outlook have diminished over the last month, the FOMC said it still expects that economic conditions may only warrant gradual increases in short-term interest rates in the coming months.

Crude futures fell sharply, as furhter signals of global oversupply dragged oil prices to levels not seen since a failed Doha summit in mid-April.
WTI dropped 1.81% on the session and Brent settled at $43.24 or 1.53% down on the day.

U.S. stocls were relative flat yesterday as plunging oil prices limited gains.

 

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Market Review, July 28, 2016

Yesterday the EUR/USD rose sharply to 1-week highs after FOMC left rates unchanged.

In a 9-1 vote, the Federal Open Market Committee (FOMC) left the target range on its benchmark Federal Funds Rate unchanged at a level between 0.25% and 0.50% on Wednesday at a two-day meeting in Washington D.C. At the same time, the FOMC only midlly suggested a rate hike could be in the offing this year.

The decision to leave US interest rates unchanged helped gold to gain strong momentum in Asian session.
Gold rose to $1,346, 0.86%. Silver also rose by 1.97% to $20.388.

Crude prices fell sharply as U.S. crude stockpiles unexpectedly moved higher last week defying expectations for a slight draw on the week.
WTI was down 2.26% on the session, and Brent dropped 2.90% on the day.

U.S. stocks were mixed yesterday, wavering in a volatile final hour of trade, as investors reacted to an unsurprising decision from the Federal Reserve to hold interest rates steady for a fifth consecutive meeting.

As a result, the Dow Jones Industrial Average inched down 1.58 or 0.01% to 18,472.17, suffering its first three-day losing streak since early-June. The NASDAQ Composite index added 29.76 or 0.58% to 5,139.81, while the S&P 500 Composite index fell 2.60 or 0.12% to 2,166.58, both remaining near record-highs.
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During the intraday trade yesterday, we saw the dollar open the day a bit weaker against the othre major currencies but managed to pare losses, supported by upbeat US housing data, while investors await the conclusion of the Federal Reserve’s monthly policy meeting scheduled for today.

EUR/USD held steady at 1.0991 while USD/JPY dropped even more, down 1.09%.

The yen was boosted by a Nikkei report saying the Japanese government planned a direct fiscal stimulus of around 6 trillion yen ($56 billion) over the next few years, disappointing expectations for as much as 10 trillion to 20 trillion yen in fiscal stimulus.

GBP/USD dropped as expectations for a rate cut by the Bank of England at its August policy meeting mounted after the Financial Times reported that Martin Weale, a member of the BOE’s rate-setting committee, dropped his opposition to an easing and now favored immediate stimulus.

Gold ticked up yesterday in cautious trade with Fed interest rate dicision on tap.

Crude prices dropped slightly after bearish API estimates strengthen concerns over supply glut.

US stocks were mixed at close of trade as gains in the Industrials, Basic Materials and Oil & Gas sectors led shares higher while losses in the Telecoms, Utilities and Consumer Goods sectors led shares lower.

 

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Market Review, July 26, 2016

Yesterday the dollar held steady at 4-m peak against the other major currencies, as investors await the Federal Reserve’s two-day July monetary policy meeting for added clarity on the pace of the US central bank’s current tightening cycle.

Any rate hikes by the FOMC this year are viewed as bullish for the dollar as foreign investors pile into the greenback in order to capitalize on higher yields.

Over the last month the dollar has surged more than 4% against its main rivals since voters in the UK rattled global foreign exchange markets by deciding to leave the European Union on the 24th of June.

GBP/USD inched up yesterday, as a report surfaced in the Daily mail stating that a raft of proposals are being drawn up in Brussels which could provide the UK with access to the EU’s single market. European leaders are considering a proposal of “emergency brake” to exempt Britain from freedom of movement rules for up to a decade while the country retains access to the single market, despite opposition from France.

Interestingly enough, the Turkish Lira spiked yesterday by 1.2%, recovering a proportion of its losses after the attempted coup in the Rupublic of Turkey on July 15 and after S&P downgraded Turkey. This recovery might be short lived as EU Commission President Jean-Claude Juncker said on Monday that Turkey “is not in a position to become a member of the European Union anytime soon and not even over a longer period.”

Gold remained relatively flat yesterday, awaiting the two-day FOMC meeting.

Crude dropped to 3-m lows as supply concers are weighing in on the prices.

U.S. stocks retreated from record territory because of the energy sector dragging the Dow Jones and the S&P down.

 

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Market Review, July 25, 2016

On Friday the dollar hovered close to 4-month highs against the ither major currencies, as global growth worries continued to weigh on traders sentiment.

The euro strengthened briefly after ECB President Mario Draghi said on Thursday that European markets weathered the post-Brexit volatility with “encouraging resilience”, but reiterated that the central bank is ready to act by using all the instruments available under its mandate if necessary.

Draghi also said the euro zone recovery faces several headwinds, and the risks remain tilted to the downside, citing the UK referendum, slowing emerging markets and the slow pace of structural reforms as key threats.

Later in the session the euro feel further after news of shooting inside a shopping center in Munich where there were multiple deaths and casualties which stoked investor jitters and spurred selling in the currency. EUR/USD slipped 0.45%.

Investors await this week’s Federal Open Market Committee (FOMC) July meeting for further indications on the timing of the U.S. central bank’s next rate hike. On Friday, Fed Future Rates from the CME Group’s Fed Watch tool placed the odds of a single rate hike in 2016 at just under 50%.

GBP/USD dropped 0.94% after U.K. services PMI dropped more than expected. The data added to fears over U.K. growth as investors continue to asses the economic effects of the Brexit vote.

The yen had strengthened on Thursday after Bank of Japan Governor Haruhiko Kuroda in a BBC interview played down speculation Japan may be preparing “helicopter money” economic stimulus, which essentially consists in injecting cash directly to the economy by printing money.

But the BBC later said its interview with Kuroda had been conducted in mid-June, which pushed the yen back down. USD/JPY added 0.10%.

Gold ticked down on Friday as the pound crashed, pushing the dollar to fresh 4-month highs.

U.S. stocks inched up, and Wall Street closed higher for 4-straight week.

 

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Market Review, July 22, 2016

Yesterday we saw the dollar drop against other major currencies during the early trade.

USD/JPY initially dropped after BoJ governor Haruhiko Kuroda Thursday ruled out the need for helicopter money. There have been suggestions of Japan issuing perpetual bonds to reinflate flagging economy.

The government reportedly is planning a stimulus package of up to 20 trillion yen.

After mixed data from the US and upbeat remarks by European Central Bank President Mario Draghi that lifted sentiment, the dollar dropped even further.
At the conclusion of its policy meeting, the ECB left its benchmark interest rate unchanged at a record-low 0.0%, in line with forecasts.

Commenting on the decision, ECB President Mario Draghi said the euro zone recovery faces several headwinds, and the risks remain tilted to the downside, citing the UK referendum, slowing emerging markets and the slow pace of structural reforms as key threats.
Darghi also said that European markets weathered the post-Brexit volatility with “encouraging resilience”, but reiterated that the central bank is ready to act by using all the instruments available under its mandate if necessary.

Later in the afternoon U.S. data on Existing Home Sales surprised with figures above the expected, allowing the USD to pare some of its intraday losses and push back up near 4-month peak.

EUR/USD closed at 1.1028, up 0.12% on the session.

Gold went up yesterday, trading between $1,310.50 and $1,332.15 an ounce before settling at $1,331.20, up 11.90 or 0.92% on the session. At session-lows, Gold fell to its lowest level since June 24 when it soared nearly 5% hours after the shocking outcome in the Brexit referendum became official. Despite the recent downturn, gold is still up

Global oil futures, on the other hand,fell sharply (2%), as persistent concerns related to the supply glut in crude and refined product remained in focus.

U.S. stocks fell sharply as the Dow Jones Industrial Average halted a nine-day winning streak, after European Central Bank president Mario Draghi hinted that the Governing Council could be ready to implement new easing measures following the decision to hold interest rates steady.

Both the Dow and S&P 500 suffered their worst one-session declines in more than two weeks.

 

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Market Review, July 21, 216

Yesterday the U.S. Dollar Index surged to fresh 4-month highs, extending recent gains as foreign exchange traders await a critical monetary policy meeting from the European Central Bank’s Governing Council for indications on the long-term direction of several top currencies. The ECB meeting comes days before the Federal Open Market Committee (FOMC) will convene for its two-day July meeting in the middle of next week.

USD/JPY surged more than 1% to an intraday high of 107.44, clearing the 107 level for the first time in six weeks. Earlier, Kyodo reported that the Japanese government is considering a JPY 20 trillion stimulus package – roughly twice the amount than previous reports had indicated. The dollar has surged nearly 7% against the Yen since former Fed chair Ben Bernanke met with Japan prime minister Shinzo Abe last week in Tokyo. The two reportedly discussed the prospect of implementing a stimulus plan involving the use of “helicopter money” as a tool for boosting stubbornly-low inflation.

USD/TRY rose as much as 1.50% to a record-high after S&P’s lowered Turkey’s credit rating deeper into junk territory. Over the last four sessions, the dollar surged more than 7% against the Lira.

As the dollar hovered around 4-m highs, gold fell as much as 1%, settling at $1,319.45.

Crude future, on the other hand surged during the after-noon session after a larger than expected draw in U.S. stockpiles and a considerable increase in gasoline inventories last week.
WTI closed at $45.70, up 0.55% and Brent settled at  $47.15, up 1.05% on the day.

U.S. stocks ticked up, as the Dow closed higher for the ninth consecutive session. It was buoyed by stellar gains from Microsoft Corporation.

Shares in eBay Inc surged more than 6% in after-hours trading after the global e-commerce leader saw its sales rise sharply over the previous quarter, marking the Silicon Valley-based company’s second straight period of quarterly gains. Shares in eBay jumped 1.81 or 6.71% to 28.80 in after-hours trading.

 

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Market Review, July 20, 2016

Yesterday, the dollar hit 4-month highs against other major currencies, after better than expected housing data was released stateside and while the International Monetary Fund (IMF) weighed in on the economic damage to the U.K. and the euro zone in the wake of the Brexit vote.

U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, hit an intraday high of 97.17, a level not seen since March. It was last up 0.56% at 97.10.

EUR/USD crept back towards the psychological 1.10 level.

USD/JPY was creeping back towards the June 24 high, day in which the U.K.’s decision to leave the European Union (EU), known as a Brexit, was revealed.

In that light, the International Monetary Fund (IMF) released its updated global forecasts on Tuesday, reducing the projection for growth in the worldwide economy in 2016 to 3.1%, from the prior 3.2%, though expecting a rebound to 3.4% in 2017.

The U.K. was hardest hit with the IMF cutting its forecast to 1.7% from the prior 1.9% for this year and slashing 2017 growth to 1.3% from April’s estimate of 2.2% due to the Brexit. This obviously resulted in the GBP/USD losing the 1.32 level yesterday and was down on the day, despite ofiicial data showing a larger than expected increase in inflation.

The euro zone did not escape unscathed as 2017 growth expectations were cut to 1.4% from the prior 1.6%.

In contrast, the IMF did cut the U.S. forecast to 2.2%, from the prior 2.4%, but said that the Brexit impact on the American economy would be muted and explained that the reduction was due to the weaker than expected read from first quarter gross domestic product.

Gold ticked up yesterday, in pite of a firmly stronger dollar.

Oil prices were slightly up in Asian session as API showed a solid fall at the end of last week.
Both the U.S. and international benchmarks of crude are down approximately 5% over the last month, erasing all of their Post-Brexit gains.

U.S. stocks were mixed, remaining near-record territory, as considerable gains in Johnson and Johnson were offset by sharp declines in Netflix.

J&J, Goldman Sachs & Microsoft all showed better than expected earnings numbers.

 

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Market Review, July 19, 2016

Yesterday, the pound rose to the day’s high after BoE policymaker Martin Weale said he was unsure if he would support an interest rate cut at the central bank’s August meeting.

GBP/USD rose 0.64% to 1.3265, coming off the lows of 1.3130 hit on Friday.

On Friday, the BoE’s Chief Economist Andrew Haldane said the bank needs to act“promptly as well as muscularly” to shore up the economy and bolster confidence. But monetary easing may not necessarily include a rate cut. The BoE could opt to boost quantitative easing or launch new measures to encourage lending.

The pound was also higher against the euro and the yen, with EUR/GBP down 0.39% at 0.8333 and GBP/JPY advancing 1.23% to 140.18. The traditional safe haven yen weakened broadly on Monday as Turkey’s government regained control of the country in the wake of Friday’s failed coup attempt.

Gold closed relatively flat yesterday, as investors unwound safe-haven trades in the wake of a failed military coup in Turkey.

Prices were also weighed after a number of upbeat U.S. economic reports last weeksuggested that economic growth regained speed in the second quarter.
The bullish data could allow the Federal Reserve to raise interest rates later this year, but much will depend on policymakers’ assessment of the impact on the U.S. economy of Britain’s June 23 vote to leave the European Union.

Interest rate futures are currently pricing in a 43% chance of a rate hike by December. Gold is sensitive to moves in U.S. rates.

Despite recent losses, gold is up nearly 25% so far this year, as speculation mounted that central banks around the world will step up monetary stimulus to counteract the negative economic shock from the Brexit vote.

Concerns about supply glut put further pressure on crude prices. Oil prices are up nearly 75 percent since hitting 12-year lows of around $27 for Brent and about $26 for U.S. crude in the first quarter. The rally has stalled since the two benchmarks breached the $50 a barrel mark in May as worries grew that higher prices will fuel more production.

U.S. stocks were higher after the close, as gains in the Technology, Basic Materials and Consumer Services sectors led shares higher.

Bank of America’s  earnings report continued the momentum for U.S. banks, kicked off by JPMorgan  last week. The bank’s shares rose 3.3 percent to $14.11, helping the S&P financial index gain 0.4 percent.
After the market closed, Netflix shares tumbled 14.5 percent. The streaming video company’s subscription additions in the second quarter fell short of analysts’ expectations.
International Business Machinesshares rose 2.5 percent after hours following results.

 

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Market Review, July 18, 2016

On Friday the yen hit a 3-week low against the dollar and was set for its biggest weekly fall in 17 years after data pointed to stabilization in the Chinese economy, bolstering global risk sentiment.

The yen is regarded as a safe haven currency partly because of Japan’s net creditor status. As a result, the yen tends to rise in times of market stress, but often comes under pressure when investor risk appetite improves.

Pound gained 1%to $1.3481, its highest in two weeks, staying firm after the Bank of England (BoE) kept interest rates on hold on Thursday, wrong-footing many investors who had expected a rate cut following Britain’s shock vote on June 23 to leave the European Union.

USD/TRY rose as much as 5% on Friday evening surging to its highest level since late-January after Turkey’s prime minister indicated that military leaders have conducted the initial stages of an apparent coup. There have been at least three attempts by the military to take over the government since 1960, the last coming in 1980. In 1993, former Turkey president Turgut Özal was reportedly assassinated in the midst of a prolonged Turkish-Kurdish conflict, which included an alleged coup attempt by the Turkey military.

Gold closed relatively flat on Friday, despite a surging Dollar. Over the previous 7 sessions, gold retreated approximately 2% in value. With the declines, Gold finished with its first negative week since early-June. Still, the precious metal is on track for one of its strongest years on record after soaring roughly 25% year to date.

Crude futures ticked up, capping a volatile week with another choppy session, as the oil rig count in the U.S. moved higher for a third consecuritve week. Oil services firl Baker Hughers reported that U.S. oil rigs rose by 6, increasing for the sixth time over the last seven weeks.

Oil prices also received a boost by favorable data in China after the government reported second quarter GDP growth of 6.7%, in line with consensus estimates and unchanged from the previous quarter.

U.S. stocls were mixed on Friday, remaining in near-record territory.
The Dow Jones Industrial Average gained  0.05% to 18,516.55, closing at all-time record highs for the fourth consecutive session. The Dow reached session-highs of 18,557.43 late on Friday afternoon, also hitting a record-high for the fourth straight day. While the S&P 500 Composite index also set a fresh all-time intra-session high at 2,164.75, the S&P pared gains to close at 2,161.74, down 0.09%. Had the S&P 500 closed higher on Friday, the index would have posted all-time closing highs in five straight sessions over a single week, a feat last achieved in March, 1998.

 

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