In the week ended stock indexes were able to demonstrate growth. It appears that the pre-Christmas rally began. US benchmarks recovered, including on the background correction of the dollar. Dow Jones rose by 2.36%. NASDAQ added 2.2%. Some support they had received from the data on orders for durable goods, which came out worse than expected (-0.1% versus + 0.1%), which gave reason to hope that the Fed will not rush into further rate increase. The German DAX 30 (FDAX) rose by 2.18%. The support he receives on expectations of further stimulus from the European Central Bank. Hong Kong HSI on general optimism also finished the week higher by 2.1%.
NZD / USD adding 1.49%, supported by data on the trade balance, the deficit of which narrowed more than expected. AUD / USD rose 1.34% to a greater extent advantage of the weakening US currency.
Gold (XAU / USD) for a week showed a mixed trend. Yet it was able to finish with a total of 0.9%. The reason – the profit on the previously open position for sale on expectations the US Federal Reserve rate hike. Silver (XAG / USD) and could strengthen to 1.87%. Brent crude oil finished the week higher by 3.58%, even despite the fact that on Tuesday updated the 11-year low, falling to around 35.96.
Chart of the week:
The economic data of the last week:
- Monday. Central Bank of Azerbaijan announced the decision to let the currency in the “free floating”
- Tuesday . US: Q3, GDP 2.0% vs. 1.9%
- Wednesday. US: November, orders for durable goods excluding transportation -0.1% vs. + 0.1%
- Thursday. US: Initial applications for benefits unemployment for the week of December 18 267 thousand. Less than the forecast 270 thousand.
- Friday. Japan in November, the consumer price index of 0.3% – unchanged compared with October
Forecast for the week on December 28 – 31
Ahead of us is another short work week. In addition, the macroeconomic calendar is not rife with meaningful reports. There are only published data on consumer confidence from the Conference Board, as well as a report on pending home sales transactions. Under normal circumstances, they would not have a significant impact, but in the conditions of low trading volumes, there may be bursts of volatility. Bullish numbers could push up US indices as give grounds to speak about the ongoing stabilization of the economy. Dow Jones (YM) as part of a New Year‘s rally may try to return to the level of 17820. Nasdaq (NQ) sets his sights on a return to the level at 4685.00.
Over the weekend, will be published data on industrial profits in China. Against this background, in the beginning of the week it will be interesting to watch the dynamics of the Hong Kong index HIS. If the report has once again confirmed its decline in the short term benchmark could come under pressure, falling to the area level 21800. However, this drop can be considered as a good entry point into long positions. The fact that the weak data from China once again raised expectations of additional stimulus from the People’s Bank of China. Medium-term aim of the index could be around 23,520.
Commodity and raw market
Oil prices finally attempted recovery from the lows. Brent gained some support against the background of data on commercial stocks in the United States from the EIA, reflected the decline. However, in general, while the situation for black gold is formed not the best way, since an imbalance of supply and demand on the world market is maintained, and the largest oil-producing countries continue to fight for market share. But if all the same in the coming week a similar report from the Energy Information Agency will record a further decline in stocks in the United States, Brent crude oil has a chance to return to the area level of 40.00.
An additional factor in favor of growth may be evidence of decline in production in the United States. The market has long been laid on such an outcome, since in the US the number of drilling rigs operating persistently reduced and now almost 67% lower than a year earlier. Of course, it is no reason to wait for a breakthrough in the long-term trend. But, anyway, you can expect that Brent foothold in the range of 35.00 – 40.00. Little support oil can get even against the background of a possible further weakening of the dollar, which is adjusted after the decision of the US Federal Reserve to raise rates.
Next week will continue the publication of macroeconomic statistics from Japan. Friday’s data on the unemployment rate (3.3% vs. 3.2%) and household expenditure (-2.9% vs. -2.4%) were lower than expected. If more and data on retail sales and industrial production will be weaker than expected, all this may cast doubt on the mood that makes the Bank of Japan at the end of the last meeting of the Monetary Policy.
The controller takes the position: not to expand the volume of quantitative easing more than has already been done. Against this backdrop, USD / JPY pair is able to demonstrate short-term growth. But in the current circumstances it is considered as a good opportunity to enter the market short positions with the immediate goal at 119.80 and further 118.70. The fact that the market is highly likely to continue taking profits on previously open positions to buy the dollar, which will provide a couple of moderate pressure.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.