Last week, the stock markets showed mixed performance. The US Dow Jones and the Hong Kong HSI on the results of five days a little stronger by 0.3% and 0.2%, respectively. But the NASDAQ fell by 0.59%. The German DAX 30 (FDAX) finished the week almost unchanged. In general, it is worth noting that the US indices are negatively affected by expensive dollar, which brings about changes in the status of the corporate sector. Do not forget that the market is preparing for a possible early start of a cycle of tightening monetary policy the US Federal Reserve.
The pair NZD / USD under the influence of a rather unexpected decision of the Reserve Bank of New Zealand to lower the rate to 3.25% week ended with losses of 0.87%. But the British pound was able to take advantage of the weakness of the dollar and its own strong data on industrial production and for the week increased by 1.92%.
Precious metals finished the week mixed. Gold rose by 0.83%, despite the fact that the active end of the week was pressured stronger retail sales in the United States. Silver lost 0.87%. Brent crude oil reached a level of 66.70 dollars per barrel under the influence of the data reflected the decline in commercial stocks in the US, but to pass this barrier could not. As a result, growth was only 2.33%.
Chart of the week:
|Brent crude oil chart
Forecast for the week for June 15 – on June 19
This week the US stock market will be waiting for the outcome of the Fed meeting. The chance that even at this meeting, the regulator decides to raise the rate is extremely low. However, recent data on the labor market (increase in the number of jobs by 280 thousand., Hourly wages by 0.3%, retail sales by 1.2%) suggest representatives in the accompanying FOMC statement will be quite aggressive and may give an allusion to the starting date of the monetary policy tightening.
At the moment, the market lays the likelihood of such a step by the Fed at the September meeting. If these hints and indeed will be contained in the comments, the US benchmark may be under pressure. Against this background, Dow Jones could continue to decline in the area of 17692 level with a further target at 17500. Nasdaq to a mark 4416.50, and, further, to 4347.90 in the event of a breakthrough. Due to the planned publication of macroeconomic statistics should pay attention to the data on building permits, as well as a report on consumer price index. Stabilization in the housing market and signs of increasing price pressures may further reassure investors that the Fed will soon go on a hike.
German DAX30 again came under pressure. Still the news from Greece have a negative impact on the benchmark. Recall that last week it became known that the IMF broke off negotiations with Athens because of serious discrepancies. Thus, the chances of an early agreement reduced. Now the whole thing for Greece, where to get a saving tranche will have to make concessions. Short additional pressure on FDAX can have data and sentiment in the business environment in Germany by ZEW, provided that the rate of decline in line with expectations. However, against the backdrop of the ongoing program of quantitative easing from the European Central Bank and any information about progress in the negotiations on the financing of Greece’s DAX 30 is able to quickly resume growth and return to around 11800. Therefore, the current decline can still be seen as a good entry point for long positions.
Commodity and raw market
Price of Brent crude oil in recent times again show a correlation with the dollar. Therefore, under the condition that the US currency will receive from macroeconomic data, or the US Federal Reserve decision support quotes black gold could come under moderate pressure. However, below the level of 60 dollars per barrel in Brent reason to fall there. The latest data on commercial stocks in the United States is not only reflected their decline, but also showed an increase in refinery utilization, which gives grounds to speak about maintaining the high seasonal demand.
If this week data from the US Energy Information Agency show a significant drop as much (6 million), a week earlier, quotes black gold may be supported. Also, do not forget that the United States continues to minimize the projects of shale oil. Of course, the pace of reduction in the number of drilling rigs operating clearly slowed. But the fact that their number has more than 50% lower than six months ago, gives grounds to assume that the decline in production in the US – a matter of time. Thus, any evidence the beginning of this process may push up Brent crude quote in which case not even possible resistance testing 70,00.
Precious metals this week will follow the mood regarding the US Federal Reserve monetary policy. Any hints to a possible rate hike at the meeting in September, will be able to send the gold price to test support at 1170.00 with a further target at the level of 1157.90 in the event of a breakthrough. And I must say that this outcome is quite likely, as the latest data from the US indicate recovery in the labor market of the country and a slight strengthening of salary inflation.
British pound in the coming week a pretext jittery. The focus will be on data on inflation at the consumer level. Even a slight increase in consumer prices may be enough for the market to believe in the possibility of an earlier rate hike, the more that representatives of the IFA have repeatedly noted that the next step will be the regulator of monetary tightening.
Against the background of such expectations is not excluded that the June meeting of the Protocol will go unnoticed unless the IFA is not in the camp showed signs of a split. Thus, the pair GBP / USD is not excluded in the growth area of 1.57 level, and further 1.5750.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for informational purposes and do not guarantee the results obtained.