Market Review, December 30, 2016

The dollar index was down 0.49% against a basket of six major currencies. The index has gained 4.2 percent this year, with all those gains having come after the November U.S. election.

“The dollar fall was mostly due to renewed doubts about the U.S. recovery after pending home sales dropped in November. This is where the risk-off reversal started,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

The drop can also be considered as profit-taking – the strong dollar that we’ve seen since the start of november could be at its current toppish environments for the short-term.

Gold prices increased sharply this week, currently trading at $1,160, triggered by “market timers” who trade aggressively when an asset reaches low levels.

Crude oil inventories showed a surprise build, pushing crude oil prices lower yesterday. In the minutes following the release, crude managed to crawl back to slight gains in choppy trade. However, U.S. crude eventually headed south while Brent pared gains to trade near the unchanged mark. Brent crude oil is currently prices at $57.17 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia have announced cutbacks of almost 1.8 million barrels per day in oil output starting from January 1 in an effort to bolster prices and support the market. In a sign that the world’s major oil producers may abide by their agreement, OPEC member Venezuela said it will cut 95,000 barrels per day of oil production in the new year.
Meanwhile, the members of an OPEC and non-OPEC committee formed to monitor the market may meet on January 21-22, according to Kuwaiti oil minister Essam Al-Marzouq, which may give an early indication of compliance with the deal.

Wall Street closed slightly lower on Thursday as bank shares declined in quiet holiday trading as traders looked to position for the new year.



Wall Street a ouvert en hausse, soutenue par les résultats trimestriels meilleurs que prévu des banques JPMorgan et Goldman Sachs et des statistiques encourageantes, avant l'audition de la présidente de la Réserve fédérale Janet Yellen par le Sénat. Dans les premiers échanges, le Dow Jones gagne 0,26%, le S&P-500 progresse de 0,19% et le Nasdaq prend 0,18%. /Photo d'archives/REUTERS/Eric Thayer

Market Review, December 29, 2016

US Pending home sales fell 2.5% in November because of higer mortgages rates. Expectationd were for a 0.4% gain in the index. The Realtors blame the drop on the low supply of available homes and rising mortgage rates.

“Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract,” said Lawrence Yun, NAR’s chief economist.

Despite the somewhat disappointing data, the USD still managed to hold steady against the euro and the pound, but sagged against the yen. In the intraday EUR/USD dropped below $1.04, trying to retest January 2003 lows.

Overnight, treasury yields fell in the wake of weaker-than-expected pending home sales data and a robust debt auction, causing for a weaker USD.

EUR/USD is pushing higher this morning and is near yesterdays intraday highs (1.04625). GBP/USD is currently trading at 1.2252 and USD/JPY is at 116.340.

The virtual, digital currency bitcoin extended its recent rally, hitting its highest levels since January 2014 amid bullish momentum. Bitcoin was trading as high as $970.44 on the New York-based itBit exchange, before falling back to $951.90 by 11:00AM ET (16:00GMT), up around 2% on the day. Technical analysis is targeting the $1000 level.

Gold prices jumped yesterday, despite a strong USD, settling at $1,142.90.

Brent crude oil reached $57.13 a barrel yesterday with the growing optimism over the global supply glut, but then dropped to just above 56 because of disappointing API reports.

Trade is expected to remain thin for the rest of the week as most investors are away for year-end holidays.

U.S. stocks were lower after the close on Wednesday, as losses in the Basic Materials, Utilities and Oil & Gas sectors led shares lower.


U.S. President-elect Donald Trump is broadcast on a screen on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 27, 2016. REUTERS/Andrew Kelly

Market Review, December 28, 2016

U.S. Consumer Confidence Index rose to 113.7, the highest since August 2001, as expectations for strength in job growth, business conditions and the stock market continued to build following Donald Trump’s election to president.

Today we have the pending home sales data at 15:00 GMT – every data that will be upbeat will help underscore expectations that the US central bank will raise  interest rates more frequently next year.

Brent crude oil settles at $56.06 yesterday, up 1.63%. Pending OPEC production cuts are increasing optimism for oil traders.

Production cuts are expected to take effect on January 1. Some cuts may take place later next year, meaning that average levels may hit the targeted range by June. While the oil markets are enthusiastic that OPEC and non-OPEC countries are even now moving forward behind the scenes.

Gold prices settled higher yesterday, at $1,140.30, up 0.59%, as trading volumes were still moderate with investors in the US returning to work after the lengthy Christmass weekend and with London markets still closed.

U.S. stocks rose slightly on Tuesday, supported by upbeat consumer and housing data, with gains in technology shares lifting the Nasdaq Composite to a record close.



Market Review, December 27, 2016

Market activity was subdued on Monday, with many major global markets closed after Christmas. The dollar edged slightly lower against the other major currencies as investors took profits ahead of the end of the year

The virtual currency Bitcoin hit its highest level since January 2014, extending its recent rally as high as $914.72, before falling back to $906.72, up approximately 1% on Monday. The digital currency is up almost 23% so far this month amid heavy buying from China and India, as investors look to shield themselves from currency devaluations and cash shortages. Bitcoin is digital cash and is not backed by a government or central bank to regulate or issue it, which makes it more attractive.

Brent crude oil is currently trading at $55.84, a dollar higher than Fiday’s closing rate.

Gold, our favorite precious metal, has found the chance to recover slightly, thanks to a thin holiday-trade and a weaker USD. The commodity is currently at $1,139, up from last Friday’s intraday low of $1,125.

Trading volumes are still expected to be low for today, as the UK, Canada, Australia, New Zealand and Hong Kong are still celebrating the holidays.


Traders work on the floor at the opening of the day's trading at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., December 22, 2016. REUTERS/Andrew Kelly

Market Review, December 23, 2016

The USD showed strength for the first part of yesterday trading day as the first batch of US data showed good numbers with the QoQ GDP data came out higher than expected. Later in the trading day the dollar turned back lower against the other major currencies after the disappointing US spending data overshadowed the strong US economic growth report.

Trading volumes were expected to be thin this week as traders were beginning to unwind positions ahead of the Christmas holiday.

Crude oil prices dropped due to profit taking and a stronger USD weighing on the commodity.

Gold prices are testing the $1,120 support level, as the precious metal is still suffering from the strong sell-off since the “risk-on” sentiment is back in the financial markets.

U.S. stocks fell on Thursday, weighed down by a dip in retailers, as investors stepped back froma recent rally fueled by optimism that President-elect Donald Trump will invigorate economic growth.



Market Review, December 22, 2016

The dollar showed some slowing in its strong bullish momentum and was slightly down against the yen and the euro. This was despite good US data, as investors took their profits out before a batch of US economic data due later today.

The EUR/USD is struggling to to over 1.04 and as our long-term analysis shows, we believe the pair could test parity as the political risk in the European Union remains a notable risk and a far stronger USD.

US crude stocks were up 2.256M barrels vs. forecast fall of 2.515M last week. The strong build weighed on oil prices and the commodity dropped to session lows.

Gold prices settles slightly lower as the precious metal is under a lot of pressure because of a climbing dollar and newly raised interest rates. Advances for the greenback makes the metal more expensive for other currency owners. Rising yields make it slightly more attractive to invest in assets that pay interest, which gold cannot.

U.S. stocks fell on Wednesday, with healthcare and real estate shares losing ground a day after the Nasdaq Composite and the Dow Jones Industrial Average hit record highs.



Market Review, December 21, 2016

The dollar keeps hovering near a 14year high against the euro, supported by the expectations of US interest rates rising more rapidly during the Trump Administration.

China’s money markets are bracing for a rough transition into 2017 – “The market is short of money. People are rushing to sell everything to get liquidity, from money market funds to corporate bonds to treasuries,” said Gu Weiyong, chief investment officer at bond-focused hedge fund manager Ucom Investment Co. “It’s a turning point from bull to bear.”
The yuan currency has fallen to levels last seen during the 2008 global financial crisis, 10-year bond yields have soared and Chinese treasury bond futures have been knocked down in an illiquid market.

API reports yesterday showed a 4.15 million barrels draw in crude stocks last week, more than the expected 2.4 million barrels – making it the fourth draw in the last five weeks.
Yesterday, U.S. President Barack Obama banned new oil and gas drilling in federal waters in the Atlantic and Arctic Oceans, in a push to leave his stamp on the environment before Republican Donald Trump takes office next month. Trump, who succeeds Obama on Jan. 20, has said he would expand offshore oil and gas drilling.

Expandig oil and gas drilling will up production and make any supply cut by the OPEC/non-OPEC countries useless and the crude oil supply glut, that has been a probleem for over two years now, will not be resolved.

Gold prices seem to have found support around $1,128 and have been trading close to that level for the past 5 days. The precious metal has suffered from a strong downside pressure since the dollar started to get stronger (since the US presidential elections), after reaching a two-year high in July ($1,375). Gold prices are still up 8% from the beginning of the year.

U.S. stocks were higher after the close on Tuesday, as gains in the Financials, Consumer Services and Industrials sectors led shares higher.



Market Review, December 19, 2016

The dollar edged lower in Asian trading overnight as some investors took profits after reaching a 14-year against the other major currencies last week.

The Federal Reserve’s interest rate forecasts released on Wednesday, after its widely expected rate increase, showed three more hikes in 2017, which fueled the dollar’s rise to last week’s highs.

“With the Christmas and year-end holidays coming, there is no incentive for investors to take new risks, and there is some profit-taking, so it is difficult for major currency pairs to move much,” said Kumiko Ishikawa, FX market analyst at Sony Financial Holdings.

Gold prices were able to recover as tension between China and the US over the South China Sea simmers. Gold is currently trading at $1,140.80 after reaching a 10-month low of $1,120 last week, as expectations for higher U.S. interest rates in the months ahead continued to weigh.

Crude oil prices are holding on to recent gains as investors bet that the supply glut will less of a problem starting January as the OPEC/non-OPEC agreement could trim nearly 1.8 million barrels per dat from the global market.

Russian Energy Minister Alexander Novak said on Friday that all Russian oil companies have agreed to cut crude output under Moscow’s agreements with members of the Organization of the Petroleum Exporting Countries. In addition, Kuwait reportedly notified customers that it would cut supplies from January as part of an effort by OPEC to stabilize the oil market.
OPEC members have agreed to reduce output by a combined 1.2 million barrels per day starting from January 1, their first such deal since 2008.



Market Review, December 16, 2016

The dollar held to its gains yesterday against the euro and a broader basket of currencies as markets repositioned for a faster pace of rate rises by the Federal Reserve over the next year.

EUR/USD closed lower than 1.05, a major support level, signaling a major sell-off in the pair.
USD/JPY is currently trading above 118.
GBP/USD is trading at 1.243.

The slump in gold prices is continuing with the precious metal trading at around $1,130, lowest settlement price in 10 months.

Crude oil prices were under pressure due to a stronger dollar but are recovering nicely as the sceptisism over the OPEC/non-OPEC members’ agreement is disappearing as Kuwait cut its supply by more than expected from January as part of a coordinated effort by oil producers to drain a global glut. International Brent crude oil futures were trading at $54.22 per barrel at 01:14 GMT, up 20 cents, or 0.37 percent from their last settlement.

U.S. stocks were higher after the close on Thursday, as gains in the Financials, Telecoms and Basic Materials sectors led shares higher.



Market Review, December 15, 2016

The US Federal Reserve has raised its benchmark interest rate by 0.25%, only the second increase in a decade.

A rate hike was expected and we believe the dollar’s strength, starting from the US presidential elections, already took that possibility into account and has been portraying the market’s readiness for a few weeks now.
The stronger effect came from the news conference where the Fed declared its outook for 2017, where they expect to hike rates 3 time (up from the November meeting where only 2 hikes were expected).

The forecast for the next three years suggests that the Federal Funds rate may rise to 1.4% next year; 2.1% in 2018; and 2.9% in 2019.
GDP growth will rise to 2.1% next year and stay there, more or less, during those years. The unemployment rate will fall to 4.5% over the 2017-2019 period, the Fed forecast. And inflation will rise to 1.9% next year and hover at that level for the next two years.

“Our decision to raise rates should certainly be understood as a reflection of the confidence we have in the progress the economy has made and our judgment that that progress will continue. It is a vote of confidence in the economy.” Fed chair Janet Yellen insisted that the US economy was in decent shape. “This is a very modest adjustment in the path of the fed funds rate, and involves changes by only some of the participants.”

But this sunny view didn’t last long, with Yellen admitting during the press conference that the Fed was operating under a ‘cloud of uncertainty’, until it knows more about what Donald Trump will do.

Yellen also addressed her future as Fed chair – “I do intend to serve out my four-year term. I haven’t made any decision about the future. I recognize I might or might not be reappointed. It’s a decision I don’t have to make and don’t have thoughts on at this time. As you said I recognize too thatI could stay on as a board member, and that’s a decision for another day.”

EUR/USD dropped to 1.0521
GBP/USD sett;ed at 1.255
USD/JPY soared more than 1% to 117.28

The dollar index is currently 102.48 – highest level in 13 years!

US stock market closed in the red, with the Dow Jones index shedding 0.6% to finish at 19,792, a drop of around 118 points. The wider S&P 500 lost 0.8%, while the Nasdaq handed back 0.5%.

Commodities were under a lot of pressure as a stronger dollar always overshadows them. Gold (the negative correlator to the USD) dropped and is currently trading at $1,138.18 and Brent oil at $54/barrel.