Stock markets ended the week “in the red“. Reasons enough. This is not strong enough statistics from the US, and signs of a decline in business activity in the euro area, and actions to inject liquidity of the People’s Bank of China, which has not brought the expected results, plus quarterly reporting season, which for a variety of companies adds frustration. The leader of the fall of last week was the Japanese Nikkei (NKD), which lost 7.41% including reactivated under the influence of the strengthening of the yen. The German DAX 30 (FDAX) fell by 6.11%. The US Dow Jones fell by 1.5%, but the NASDAQ has fallen to 5.87%, disappointed by Friday’s US jobs data, which showed an increase in the number of new jobs in all 151 000 Hong Kong HSI also closed the week lower by 2.4 %.
The pair USD / JPY has lost everything that could make earlier decisions on the background of the Bank of Japan to introduce negative rates. As a result, at the end of the week it fell by 3.25%. The reason lies in the weakness of the dollar, which was clearly disappointed with published statistics. But its further reduction may be difficult because it is pretty close stolen up to the level of 116.50, which was called as “key“. A stronger yen strengthening for the national regulator is highly undesirable.
The leaders of growth by the end of the week turned out to be precious metals, took advantage of the change in sentiment regarding the US Federal Reserve monetary policy. Gold (XAU / USD) has jumped to the level of 1174.44 (up to the end of October 2015), entrenched at 4.93%. Silver (XAG / USD) increased by 5.26%. Brent crude oil finished the week at 4.96% fall.
Chart of the week:
The economic data of the last week:
- Monday. China in January, PMI (Caixin) in the manufacturing sector 48.4 vs. 48.0
- Tuesday . Reserve Bank of Australia kept interest rates at 2.0%
- Wednesday. USA: January, business activity in the ISM Services 53.5 vs. 55.1
- Thursday. The Bank of England kept interest rates at 0.5%. 9 Voting results: 0 in favor of the constant level
- Friday. US: number of new jobs created outside the agricultural sector 151 000 – below the forecast of 190 000. But at the same time marked by the growth of average wages and the fall in the unemployment rate to 4.9%
Forecast for the week on February 8 – 12
The new week will be less eventful. However, the reasons for the unrest may still be. In particular, special attention should be paid performance Janet Yellen to be held on Wednesday, February 10. The head of the US regulator will speak before Congress. The market will watch closely, what grade it will give the economy, and will feature some hints regarding monetary policy prospects. As a result of the January meeting, the Fed was soft enough.
Last week, in the same vein, he expressed and Dudley. He noted that in comparison with December, “financial conditions have tightened considerably” and, if they persist, it will have to take into account when making decisions on monetary policy. If it confirms a mild attitude, the US indices may still try to start an upward correction after the NFP data reflected the lower-than-expected growth in the number of new jobs, reinforcing fears that the economy may show slowing. Against this background, Dow Jones (YM) can continue to restore the level of 16675 after breaking the mark 16450. Nasdaq (NQ) may undertake an attempt to return 4245.00.
Commodity and raw market
Oil prices last week showed mixed trends. But on the whole, an energy coming prospects look quite optimistic. As it became known, the six countries of the largest oil producers, including Iran, Iraq and Russia, are ready to take part in the extraordinary meeting of OPEC. On Sunday, a meeting should take place in Venezuela oil minister with a colleague from Saudi Arabia, where he will try to persuade him to join the negotiations. Similar initiatives in Saudi Arabia will be quite difficult to ignore. This means that the country may agree to participate in the meeting.
For this fact alone could push quotes of Brent crude oil in the area of 39.40 level. It is obvious that if the meeting will be held, and trade-offs will not be found, it would have a negative impact on the energy market. In addition, note the publication of black gold will attract short-term forecast of the EIA report and the global demand and supply of oil on the world market (9 February). According to recent reports, in December, the surplus amounted to 1.55 million barrels per day. In general, even if the figure does not show growth at the end of January, it already can be perceived by the market as a positive signal that will also push up quotes Brent. If the imbalance intensified, short-term decline in oil prices is not excluded, but it can provide good opportunities to enter long positions.
Last week, gold (XAU / USD) has shown steady growth. It is worth noting that a key factor supporting the precious metal made changes in expectations for further Fed action on monetary policy. If in December, the US regulator sounded quite aggressively, hinting at the possibility of four rate increases for 2016, it is already, the possibility to increase the March meeting is estimated at 7.8% according to the data of the positions in the futures rate.
In light of this very interesting is the speech of the US Federal Reserve in front of Congress, scheduled for February 10. If Janet Yellen will confirm a mild mood regulator, the dollar could come under additional pressure, which will only increase under the condition of a weak report on retail sales on Friday. Against this background, the yellow metal has the potential for further growth with the primary goal in the area of the level of 1191.43 (maximum in October 2015) dollars per ounce, which break would open the way to the next psychological level 1200.00. Although at the beginning of the week profit-taking is not ruled out, which may lead to a downward correction, which can provide good entry points into long positions.
The pair EUR / USD has shown impressive growth in the dollar’s weakness. But even a mixed report on the US labor market was enough for the pair reversed 180 degrees and quickly retreated from the highs. Let me remind you that the number of new jobs created was lower than expected (151,000 vs. 190,000), but at the same time, the unemployment rate fell to 4.9% from 5.0% and average hourly wages on a monthly basis rose by 0.5 %, which gives reason to expect inflation at this level.
This week we are waiting for a fairly large block of European statistics, in particular, it will be data on the trade balance and the German consumer price index, the final data on the growth rate of the German economy and the euro zone in Q4, as well as reports on industrial production. Weak statistics can create the preconditions for reducing the European currency quotations, as the market begins to “laid” on the extension of incentive programs by the European Central Bank. Against this background, it is possible decline in the EUR / USD in the first half of the week in the area of 1.0960 level. And further to 1.0910. But this will be possible only in case of a sufficiently aggressive tone of the comments of the US Federal Reserve.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.