On Friday, the dynamics of the euro has caused surprise – EUR / USD updated 3-week high at around 1.1379, on the topic of the general weakness of the US dollar. Maybe his role is played and the protocol FOMC, from which it became clear that the weak inflation and the growth rate of the global economy is seriously concerned about the Fed. Commodity bloc currencies also enjoyed growth, thanks to the widespread strengthening of prices for metals and oil.
Stock indexes on Friday were in a positive mood, though surges not shown. On the other hand, commodity markets enjoyed a rally full. Gold was getting up to a maximum of $ 1158.84 per ounce. Meanwhile, Brent touched 54.02 dollars a barrel, but by the close of trading returned to the area of 52.00 dollars per barrel.
Chart of the day:
Economic data Friday:
- Because of Glencore’s decision to reduce the volumes of zinc prices, and then on all metals soared up
- Alcoa officially launched the corporate reporting season, showing earnings per share lower than expected: $ 0.07 vs. $ 0.13
- UK: August trade deficit of 11.1 billion pounds against 10.0 billion forecast
Forecast for the week, October 12 – October 16
On Friday, the head of the European Central Bank Mario Draghi reiterated that the regulator is ready to use all available tools, and may adjust the program of quantitative easing. Chances expansion stimulus from the central bank has increased significantly in recent days against the backdrop of weak economic data from the euro zone, including low inflationary pressures, appreciation of the euro and rising external risks affecting the dynamics of the euro. In the context of stabilization of the situation on the world stock markets, especially on the trading floors of China rumors of additional stimulation may again revive demand for the German DAX (FDAX) with the immediate goal at around 10440. This week could be a litmus test for the benchmark for further direction.
In addition, the week is still paying attention to reports on retail sales and inflation in the United States. The labor market has shown himself not with the best hand, now the interest will be consumer demand and price pressures in the economy. If these reports will be weak, it is quite sure market in low chance the Fed rate hike in October and jeopardize the legitimacy of tightening in December. In addition, the market already there are talks about the probability of the fourth round of quantitative easing in the US. Thus, the US indices is very good chance to resume growth with a probability of achieving 4440 on NASDAQ (NQ), 17280 of Dow Jones (YM) and in 2040 by S & P (ES). The only obstacle on the way up can act weak quarterly reports from the corporate sector. This week will publish financial results Johnson & Johnson and JPMorgan Chase (Tuesday), Bank of America (Wednesday); Citigroup, Goldman Sachs and Philip Morris (Thursday) and General Electric (Friday).
Commodity and raw market
Brent is still closed a victorious week correction by almost 3% from the highs. For the most part, this was due to technical factors – a sharp continuous growth during the week ended logical back before the weekend on profit-taking. In addition, a role could play and the news that Congress voted to repeal the ban on oil exports to the United States. So far, the bill would have to go through many more obstacles, but theoretically, in the medium term it can put pressure on the energy market.
The next week is likely to be decisive in the determination of a new range of oil. It is evident that the decline in energy production in non-OPEC and rising geopolitical tensions in the Middle East will continue to be factors of support for Brent. However, in order to continue to strengthen, asset requires additional drivers. Data Baker Hughes, confirmed the fall in the number of active oil drilling rigs to 605 from 614 the previous week, most likely, will not be enough to break the mark of 54 dollars per barrel. Thus, it is possible return to range trading energy market, though now at higher levels – within 50 – 54.
And pay attention to the industrial metals, including copper and (HG). On Friday it became known that the commodity trader Glencore and manufacturer of metal will reduce the release of zinc by 500 000 tonnes to preserve the value of stocks at low prices for zinc and lead. In addition, the expected firing about 1,600 workers in Australia. As a result, prices for zinc and copper, and then went up sharply on expectations that the fight for market share is completed and the producers are no longer willing to put up with the current state of affairs. For most companies, such low prices make the increase in production unprofitable. If the process will acquire global dimensions, Commodities grope “bottom” and surely will go up. The immediate goal on the way up to the area of copper may be 2.4680.
In addition, in the coming days, the focus will remain and the pair GBP / USD. Data on inflation and the labor market is very important for the Bank of England, as it was for him, he appreciates the need for changes in the course of monetary policy. We have mentioned before that the couple have a good potential of up to 1.56, provided favorable news. Even the growth rate of average wages will be enough to support a new round of demand for the pair. Moreover, capital flows within the framework of the merger Anheuser-Busch and SAB Miller are still a couple of weeks to maintain interest in the pound sterling.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.