Gold and Yen – remedy against panic. Forecast for the week on February 15 – 19

By | February 14, 2016

Most of the week stock markets remained under pressure on Friday, and only managed to partially recover losses. To some extent, contributed to this application Deutsche Bank to redeem certain series of senior unsecured debt of about $ 5.4 billion. For the second week in a row becomes a leader in the fall of the Japanese Nikkei (NKD). The benchmark lost 6.61%, which is largely due to the sharp appreciation of the yen – the rate USD / JPY dropped to 110.97 – the lowest level since October 2014. The German DAX 30 (FDAX) fell by 2.8%. The US Dow Jones fell by 1.21% and the NASDAQ was able to finish the week symbolic loss of 0.15%. Hong Kong HSI on the basis of incomplete work week dipped by 3.67%.

Risk aversion, coupled with expectations of a longer pause before the next rise in the US Fed has made its own changes and the dynamics of commodity assets. The leaders of growth were the precious metals again. Gold (XAU / USD) has reached the level of 1263.23 (annual maximum). asset growth amounted to 5.56%. Silver (XAG / USD) increased by 4.77%. Brent crude oil finished the week on a drop of 3.93%, despite the fact that the last time showed a strong recovery.

Chart of the week:

Gold chart

Gold chart

The economic data of the last week:

  • Monday. Moody’s has revised its rating Australia with AA1 to AA2
  • Tuesday . Germany: December, the trade surplus narrowed to € 18.8 billion compared to the forecast growth of up to 20.2 billion
  • Wednesday. The Fed chief Janet Yellen adhered to the “soft” attitude within the speech on the economy and monetary policy
  • Thursday. Swedish Riksbank cut interest rates by 15 points to 0.50%
  • Friday. US January retail sales + 0.2% vs. + 0.1%

Forecast for the week on February 15 – 19

Stock market

At the end of the week the stock markets still made a rebound from the lows. To say that the fall has stopped, perhaps somewhat prematurely. But upward correction may still take place. Now almost obvious that in March, do not expect the Fed raising rates. And for a short time, it can cause a sigh of relief. Minutes of the January meeting, which will be published on Wednesday, most likely, will not bring anything new, but merely confirms the “soft” mood regulator.

In addition, attention should be paid to data on producer price index, a report on industrial production and consumer price index. Low price pressure will be another confirmation that the Fed‘s rush to the tightening of monetary policy will not be. Consequently, if the market is not overwhelmed by a new wave of panic, the US indices continue to be able to roll back. Dow Jones (YM) can continue to restore the level of 16080 and, further, to 16450. Nasdaq (NQ) may undertake an attempt to return 4110.00.

Commodity and raw market

Prices of Brent crude oil to the end of last week, yet retreated from the local minimum. At this stage, there is no sufficient catalysts for strong growth in the energy carrier of quotations nor to he updated lows. On the one hand, the world has continued to report a surplus supply which in January rose to 2.01 million barrels in fact, against 1.55 million in December 2015. Also recorded growth in OPEC production. In January the cartel increased production to 32.335 million barrels. And this is clearly not conducive to the growth in energy quotes, as well as concerns about the global economic outlook. However, the market continues to haunt the rumors that the oil-producing countries will still find a compromise in order to stabilize prices for black gold. In particular, it is at least of the “freezing” of production at current levels.

However, in this barrel of honey is and fly in the ointment. For example, Saudi Arabia supported the idea. But it is not ready to take such a step if Iran does not follow the example of others. And the country has only recently got rid of sanctions and is ready to fight for their market share. Also, do not forget that the US continues to decline the number of drilling rigs operating, which could result in a reduction in production volumes. Moreover, the United States and Canada, oil companies once again preparing for the large-scale reduction of costs and will be forced to abandon all wells unprofitable. Thus, in the short term, Brent may show mixed trends within the range of 30.00 – 36.20 dollars a barrel.

Last week, gold (XAU / USD) continues to grow. It is worth noting that after the short-term correction in the precious metal is preserved chances for the resumption of growth. The fact that Friday’s data on US retail sales, which only slightly exceeded the forecasts, is unlikely to be enough to change expectations about monetary policy the US Federal Reserve. At the moment, after comments from Janet Yellen on Wednesday, the probability increase at the March meeting, is estimated as zero, according to the data of the positions on the futures rate. In light of this interest will be data on inflation at the level of producers and consumers, which will be released next week. Even the slightest sign of the decline of the price pressure may be enough to strengthened market expectations of a prolonged pause in monetary tightening. Coupled with the instability in the financial markets, which leads to flight from risky assets, it can support gold, aiming it at the level of growth in the area of ​​1275.00.

Currency market

Next week the markets returned to China after the celebration of the New Year Lunar. By the publication of a number of scheduled reports. This is the data on the trade balance and the index of leading indicators. Also come reports on consumer and producer prices. In recent years, China‘s economy is showing clear signs of slowing down. And while all the attempts of the People’s Bank of China as something to stabilize the situation, in fact, turn out to be fruitless. In general, if the reports come not strong enough, it can affect the commodity currencies. AUD / USD and NZD / USD could come under moderate pressure.

Of course, if we talk about the “Aussie“, he is able to demonstrate a little more resistance due to the fact that the Australian economy to adjust quickly to the downturn in the commodities markets and feels quite stable. In addition, the minutes of the last meeting of the Reserve Bank of Australia will be published. Taking into account the fact that the accompanying statement issued earlier, contained quite optimistic assessment of prospects for the economy, to wait unpleasant surprises on the part of the protocol, perhaps, too, it is not necessary. But the New Zealander can experience the pressure, especially if the price index for dairy products, which is one of the main export products, will continue to fall. In light of this interest to trade can be cross-rate of AUD / NZD.

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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