Brent crude oil can change the range. Forecast for the week on February 29 – March 4

By | February 28, 2016

In the week ended equity indices showed positive dynamics. Not the least role in this played the stabilization of oil prices. American optimism benchmarks added and revised data on the rate of economic growth. Q4 GDP was revised upward from 0.7% to 1.0%. As a result, Dow Jones rose by 1.4%, while the NASDAQ rose by 1.63%. German DAX30 second week in a row completes growth (+ 1.25%). Hong Kong HSI showed a mixed trend and at the end of five days showed growth of only 0.52%. The leaders of growth were the Japanese Nikkei, which is against the weakening of the yen and expectations of additional stimulus from the Bank of Japan added 3.22%.

On the foreign exchange market has become the leader of the fall of the British pound. The pair GBP / USD lost 3.71%, down to the level of 1.3864, noting the 7-year low. A key factor in the pressure on the pound remain British exit from the EU fears that poses a serious threat to the economy. Against the background of positive dynamics of oil prices and the fall showed a pair USD / CAD. The Canadian dollar was able to strengthen his colleague from the United States at 1.85%.

Precious metals for the week is still under pressure. Gold (XAU / USD) has lost 0.32%. Silver (XAG / USD) suffered more impressive Loss: -4.21%. Recovery in the stock markets, the upward revision of US GDP data for the 4th quarter and the statements by the Fed Loretta Mester that the regulator is to continue raising interest rates in 2016, have become the main negative factor for the metal. Brent crude oil in the second half of the week is clearly demonstrated a positive attitude, and even the most updated in January, rising to 37.24, but the closure has given part of the earned, ending trading at 35.50. However, an asset for the week showed an increase of 7.1%.

Chart of the week:

gbp / usd chart

GBP / USD chart

The economic data of the last week:

  • Monday. Eurozone: February index of business activity in the manufacturing sector (Markit) 51,0 against the forecast of 52.0
  • Tuesday . US February consumer confidence index from the Conference Board 92,2 – below the forecast of 97.4 points
  • Wednesday. US: February, PMI Markit Services in 49.8 vs. 53.5
  • Thursday. USA: January, orders for durable goods + 4.9% vs. + 2.5%
  • Friday. US. Q4 GDP growth + 1.0% against the preliminary assessment of 0.7%

Forecast for the week on February 29 – March 4

Stock market

The coming week will be quite eventful interesting macroeconomic statistics. Deserve attention data on business activity in the industrial sector and the service sector (ISM) and the US employment report in the private sector by ADP. Deserves special attention the report on the labor market (NFP), which will be published on Friday. It is worth recalling that in the past month, the number of newly created jobs fell to 151,000 from 292,000 previously. Therefore, if this time the figure will be released weaker than expected, it can be quite alarming deterioration of the situation in one of the key sectors of the economy.

In addition, it is necessary to monitor and data on the growth rate of hourly wages, which will allow to assess potential inflation at this level. In general, if you planned to publish the statistics would be quite weak, the market will begin to be put on a long pause, which will withstand the Fed before the next rise. At the same time, the first reaction to the pessimistic statistics may be a short-term decline in US indices. Subsequently, however, benchmarks can turn 180 degrees. Dow Jones (YM) can rise to the level of 16950 with a further target at 17080. Nasdaq (NQ) after a break above 4300.00 level can target the traffic to mark 4405.00.

Commodity and raw market

Prices of Brent crude oil in the second half of the week showed a positive trend. Moreover, of Brent, finally, I made an attempt to gain a foothold above the level of 36.20, which limits the range of vibrations from above during the last month. Technically, this level will allow a breakthrough in the area expect an increase in the level of 40.00. But while the price break through the barrier did not succeed. The fact that the increase was largely due to expectations that the oil-producing countries will still be able to agree on actions that will stabilize prices.

Recently we conducted an active dialogue between the major exporters to reduce the imbalance of demand and supply of black gold on the world market. According to the latest meeting of the OPEC member countries and countries outside the cartel, to be held in mid-March. Moreover, according to rumors, it will be about freezing at lower levels than were recorded in January 2016. But it may already be a serious claim. If an agreement is worked out, the chances to reduce the surplus will increase proposals and, of course, then the oil will get strong support. In the meantime, you can expect a change in the oscillation range higher, limited levels of 35.00 – 40.00 dollars per barrel of Brent.

Currency market

This week a decision on monetary policy released by the Reserve Bank of Australia. It is possible that the regulator will keep the rate unchanged at 2%. In this situation, a lot will depend on the rhetoric accompanying statement. Earlier, the Reserve Bank of Australia was quite optimistic in their statements. Moreover, the Protocol February meeting contained hints that reduction is possible, but as long as this is not necessary. Statistics published in recent years, was controversial. On the one hand, the labor market in Australia has not held up to forecasts for all major components.

Unemployment rose to 6% from 5.8% due to lower full-time employment for 40 thousand. This may be the first signal to the fact that the economy may begin to slow down. However, in Q4 capital expenditure were higher than forecast, highlighting the power of the service sector and the weakness of the mining sector. Thus, one can not completely exclude the possibility that the Reserve Bank of Australia will change the tone of its comments on the less aggressive, that can have on AUD / USD moderate pressure. In this case the pair is able to decrease the area of ​​the level of 0.7060 with a further target at 0.7000.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

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