Review 13 – July 17: too many agreements. Forecast for the week July 20 – July 24

By | July 19, 2015

All week the market had expectations resolution “Greek problem“, as Athens had to go through several stages in order to get at least a bridge financing in the form of a bridge loan. In fact, the current week was more productive than the previous 4.5 months of negotiations, but the EUR / USD continued to fall, realizing that the agreement does not help. The pair went down to 1.5-month low of 1.0827. Meanwhile, GBP / USD was able to gain a foothold thanks to the aggressive attitude of the Bank of England. Even in a weak data on inflation and the labor market a pair reached 1.5675 high.

Stock indices were able to dramatically accelerate the move up as soon as the desire of the market to make a profit outweighed the fear of loss. Most others have won the US indices, as they still cause much more confidence in the face of uncertainty than European and Asian counterparts. NASDAQ even have time to update the historical maximum at the level of 4653. Commodity markets, by contrast, is seriously injured. London Brent crude fell under the pressure of the strong dollar and the agreement reached with Iran – the asset is reduced to a week low of 56.65 dollars per barrel, while gold went down to 8.5-month low of $ 1131.14 per ounce.

Chart of the day:

gold price chart
Gold price chart

Economic data Friday:

  • Germany approved the financial aid to Greece
  • China published data on the volume of foreign exchange reserves: the indicator rose by 57%
  • Reporting Google came out higher than forecast: EPS was $ 6.99 per share vs. $ 6.73. Revenue grew by 11%.
Forecast for the week July 20 – July 24 
Stock market
In the coming week, undoubtedly, Greece will remain in the spotlight, as it has yet to go through a lot of obstacles on the road to recovery. In this regard, DAX (FDAX) may experience short periods of downward correction, which is used to enter the market long-term purchase. It is possible that the first test for the index will be passed on Monday, when Athens will carry out its planned payment to the European Central Bank. In addition, any comments on the topic of a possible reduction of the debt burden of the country, which increasingly we hear from officials, can stimulate the rapid growth of the benchmark with the immediate goal on the way up in the region of 11,850.
In addition, pay attention to the dynamics of the Hong Kong Hang Seng (HSI) – asset gradually starts to move upwards, which means that the market still believe that China is able to stabilize the situation. Undoubtedly, the important role played published in Friday’s report on the volume of foreign exchange reserves of China, which turned out to be significantly larger than previously reported by the authorities. The fact that the Chinese authorities have even gone to the disclosure of information to conceal the past 6 years, in order to stabilize the situation, said that they are set very firmly. For the market the most important thing – to restore confidence, and China seems to have gone the right way. If you break the mark of 26,000 still take place, it makes sense to consider opening position for the purchase.
Commodity and raw market
Quotes Brent, as we noted, are under pressure from two factors in the form of a strong US dollar and the lifting of sanctions against Iran. On Friday it was reported that an Iranian oil tanker with two million barrels of oil went to Asia, noting the return of oil producer in the markets after the key agreement on the nuclear issue. Despite the fact that the full country will return to “business” in the next year, even a small increase in exports in the current environment may put pressure on sensitive oversupply of oil prices. Rather, at the moment we observe trade in the range of asset, just slightly below the range of moved – within the scope of 55.00 – 60.00 dollars a barrel. Thus, when approaching the lower boundary makes sense to buy an asset, and to the upper – sell.
Also of interest in the coming week will be and precious metals. We have already noted a sharp weakening of the gold to multi-month lows, which may offer good entry point for long-term market purchases. Although there was a downward trend in the asset, we believe it will be of short-term nature. The reason to think so is not only historically low levels, although this is important. Today we want to draw attention to China recent decision to open its statistics in terms of gold. It turned out that reserves of precious metals in the PRC on 57% higher than stated last six years. If the Chinese authorities to stabilize the situation on the stock markets prefer to publish similar reports on a monthly basis, this could have an impact on the gold market. We do not exclude that the current low levels to attract the attention of central banks around the world, and already next month rate of gold reserves in China is much older, this may stimulate the demand for XAU / USD in the medium term.
Currency market
In addition, the current week will be full of economic events from export of raw economies that will be reflected in the dynamics of the commodity currencies. The main event will be the decision of the Reserve Bank of New Zealand, at a rate as very good chance to see another easing of monetary policy in the context of falling prices for dairy products.
It may cause a new wave of pressure on the NZD / USD with a medium-term objective at the level of 0.63. But the rest of the commodity currencies may be of interest in connection with the publication of data on Australian inflation speech of the Reserve Bank of Australia Stevens, as well as the release of Canadian retail sales report.
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. 
Share on FacebookShare on Google+Tweet about this on Twitter

Leave a Reply

Your email address will not be published. Required fields are marked *