Monthly Archives: March 2016

The dollar may receive additional incentives for growth. Forecast for the week on March 28 – April 1

In the week ended stocks interrupted growth. In addition to technical factors, intervened in the case and the geopolitical risks in the form of explosions in Brussels on Tuesday, and a fairly aggressive comments from the US Federal Reserve. During the week, we heard a number of statements that the Federal Reserve, it might make sense to consider a rate hike already at the meeting to be held in April. On this background benchmarks showed mixed movement, and to the final short working week came with expressionless results. The US Dow Jones and S & P fell 0.23% and 0.43%, respectively. German DAX30 lost 0.4%. Some support benchmark was against the background of a downward correction of the pair EUR / USD. Hong Kong HSI fell 3.04%, including, and amid reports of lifting the ban on the sale of shares in China.

The largest growth was the pair USD / CAD, which appeared 2.03%. Falling oil prices and a revision to increase the US GDP for the 4th quarter allowed the pair to roll back from recent lows. GBP / USD pair has become a leader in the fall, down 2.38%. A key factor in the pressure on the pound are growing concerns about the possible withdrawal of Great Britain from the EU.

Commodity assets during the week remained “in the red“. The dollar enjoyed increased demand on the background of the “hawkish” comments by the US Federal Reserve, which exerted pressure on assets denominated in it. Impressive drawdown showed precious metals. Gold (XAU / USD) finished the week at 1,216.49, losing 3.03%. Silver (XAG / USD) fell by 4.04%, falling to 2-week low 15,133. Brent crude oil retreated from its yearly high and finished the week with a total of -2.39%.

Chart of the week:

silver chart

Silver chart

The economic data of the last week:

  • Monday. US: February Chicago PMI -0.29 vs. 0.41 previously
  • Tuesday. UK: February, the CPI + 0.2%, + 0.3% vs. + 0.4%, + 0.3%
  • Wednesday. Nike has published financial statements: EPS $ 0,55 against the forecast of $ 0.49, revenue increased 7.7% to $ 8 billion, which is slightly below the $ 8.2 billion forecast
  • Thursday. UK: February retail sales -0.4%, + 3.8% vs. -0.7%, + 3.8%
  • Friday. US. Q4 GDP revised to increase to 1.4% vs. 1.0%, according to preliminary estimates

Forecast for the week on March 28 – April 1

Stock market

This week the market will very closely follow the US statistics. This is not surprising, taking into account the fact that after the “soft” accompanying statement following the meeting held on March 16 is literally the next week, we hear statements Partick Harker, Charles Evans, Dennis Lockhart, James Bullard and John Williams that Fed should consider a rate hike in April, provided that the economy will show signs of cooling. Given that the US regulator puts the situation in the labor market and inflationary pressures, cause for concern could emerge at the forefront.

The market will follow the report on employment in the private sector from the ADP, as well as data from the Challenger on the job cuts, which will allow to speculate as to what would be the key NFP report, published on Friday, 1 April. Signs of further stabilization in the sector will be able in the short term to cause the fall of the American benchmark as reinforce expectations of tighter Fed monetary policy already at the meeting in April. However, it may return to growth as the strong labor market will indicate stability in the economy, which will have to wait and growth in corporate profits in the future Dow Jones (YM), S & P (ES) and NASDAQ (NQ). The primary objectives are likely to be levels: 17700, 2076.30 and 4480.00, respectively. The only thing that can dampen the spirit of the Federal Reserve – the slowdown in wage growth.

Commodity and raw market

Brent crude oil retreated from its yearly high. At the moment quotes black gold declined to a level of 39.22, but the closure of the week rebounded to the level of 40.42 dollars per barrel. Overall, this suggests that in the area of ​​38.30 – 39.00 USD price form “local bottom” and is unlikely to go away for a long time below this mark. At the current stage of oil prospects are mixed. On the one hand, the market is still looking forward to meeting the major oil-producing countries of the world in which they will have to agree on a freezing of production volumes, despite the fact that a number of countries, said that will not take part in it (in particular, Iran and Libya, are planning to increase the volume). But the fact that Saudi Arabia is ready to take this step, despite the fact that he still will not be completely synchronized, black gold has moderate support.

However, expect to achieve new highs only to those expectations, it is not necessary. Brent will continue to grow only on the condition that the agreement, in fact, be achieved, or if there will be evidence of reducing supply on the world market, for example, in the form of a sharp decline in US production volumes. However, the market continues to receive evidence of the growth of commercial stocks in the US. And if in the environment of the EIA report again reflect their impressive growth, short-term sale of the assets can not be avoided. Thus, we can say that Brent during the next working week will be held within the previously established range of 38.30 – 42.50.

Copper (HG) proved to be on the same wavelength with the Commodity assets, which showed a decline against the strengthening of the US dollar. Although there were additional reasons for the fall in prices. In particular, it is the fact that copper inventories on the Shanghai Stock Exchange reached a record level of 400 thousand. Tonnes, an increase from the beginning of the year by nearly 220 thousand. Tonnes. Such dynamics indicates a relatively low demand in the current phase. If we take into account also the threat of a further slowdown in the Chinese economy, which is the world’s largest consumer of the red metal in the world (about 45%) can be expected, and further reduce prices.

One of the pressures on the metal, may make data on the index of business activity in the industrial sector of China, published on 1 April. Since March 2015 PMI Caixin kept below the 50 level that separates growth of the sector zone by zone recession. If the index deepen the negative territory, it will be another signal to a possible drop in GDP growth of China in the 1st quarter of 2016, which had a negative impact on expectations of demand for copper, which can send the quotes to the level of 2.1450 after breaking the mark 2.1970.

Currency market

The pair USD / JPY next week may continue to grow, which it has demonstrated over the past 6 days. Top quotes couples can push, primarily by optimism the US dollar, provided that the published macroeconomic data will be released optimistic enough to convince markets in the United States the possibility of an early Fed rate increase. Also, do not forget that in Japan, inflationary pressure remains very low (according to the latest data, the core consumer price index in February remained unchanged instead of growth by 0.1%), which creates conditions for the preservation ultrasoft monetary policy national a regulator for a prolonged period of time. If more and Japanese data on household spending, retail sales, unemployment and industrial production will be released below expectations, the couple will receive an additional impetus for growth in the level area of ​​114.60.

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

Oil may continue to grow. Forecast for the week on March 21 – March 25

In the week ended equity indices showed mixed trends. The growth leaders broke CHILE, which added 3.22%. Hong Kong HSI rose by 2.41%. The growth of the US Dow Jones, NASDAQ and S & P was less impressive: 1.8%, 0.96% and 0.92%, respectively. In general, this is understandable, since on the one hand, soft Fed comments on monetary policy prospects are for the benefit of benchmarks, but on the other hand, everybody understands what the regulator’s decision is due to fears of weak growth rate of the economy, and it already is and lead to a decrease in corporate profits. German DAX30 rose by 0.94%. In part, limiting the growth of the benchmark factor was the strengthening of the euro, triggered by the weakness of the dollar after the publication of the Fed decision.

Commodity assets also closed the week on an optimistic note. Brent crude oil has updated a maximum of more than 3 months, up to the level of 42.52 dollars per barrel, having strengthened by 2.73%. Precious metals were able to recover the losses suffered earlier in the week on expectations of more aggressive Fed statements regarding monetary policy, since the US regulator did not meet market expectations. Gold (XAU / USD) ended the week with a total of 0.45%. Silver (XAG / USD) showed a significant growth, adding 1.94%.

Chart of the week:

Brent crude oil chart

Brent crude oil chart

The economic data of the last week:

  • Monday. China in January, industrial production + 5.4% lower than the forecast of + 5.6%
  • Tuesday. The Bank of Japan kept interest rates and the volume of the quantitative easing program unchanged
  • Wednesday. US Federal Reserve kept interest rates unchanged. “Soft” regulator comments lowered expectations to raise rates in the coming months
  • Thursday. Norwegian Central Bank lowered the rate by 25 basis points to 0.5%, noting the likelihood of further easing

Forecast for the week on March 21 – March 25

Stock market

The German DAX 30 index stumbled upon a rather strong resistance level of 10055.0 area. While pass this barrier benchmark fails. In general, it is not surprising, since European Central Bank head Mario Draghi made it clear that under the current conditions do not see any reason for further rate cuts. In addition, the growth index and prevents a fairly high rate of common European currency. Next week will be published some interesting reports. This index of economic expectations of the IFO, the index of business sentiment from the ZEW, and data on business activity in the industrial sector and in the sphere of services in Germany.

If the statistics will be relatively weak, reflecting the deterioration in business expectations and the slowdown in the major sectors of the economy, DAX 30 (FDAX) can develop a short-term decline in the level of 9770.0 district. However, taking into account the fact that the weak numbers could return expectations that the European Central Bank will still be forced to continue to stimulate the economy in the future will be able to cause a reversal of the dynamics at 180 degrees. Therefore, the current decline can be fun to open short positions to buy.

Commodity and raw market

London Brent crude oil attempted to break out of the previously established range of 38.00 – 41.45 and in the moment quotes rose to a mark of 42.52, but to gain a foothold on the progress it failed. As a result, the day Brent completed at 41.40. However, the current pattern suggests that Brent will try once again to continue to grow. Firstly, the growth rate of commercial stocks in the US is slowing. Second, in the United States recorded decrease in production volumes, which seems quite logical on the background of a sharp drop in the number of operating rigs. Although, of course, a key factor supporting the black gold are meeting the expectations of the largest oil-producing countries, both within and outside OPEC, the total production of nearly 73% of the world total.

The market expects that an agreement will be reached on the freeze, because all are well aware that to hold a meeting of such level and find a compromise solution, then collapse the price of black gold. Of course, lightning correct the imbalance of supply and demand will not happen, but in the medium term, this goal can be achieved. Thus, Brent has a chance to continue movement in the district level after the break above 43.50 resistance 42.40.

Currency market

GBP / USD pair continues to retreat from earlier lows. In part, this contributes to the weakening of the dollar, caused by a “soft” attitude the US Federal Reserve. But the results of the last meeting of the MPC also give a mild cause for optimism. The Bank of England said productivity growth, the strengthening of the labor market that supports incomes and consumer demand. Also, the regulator has made it clear that his next step will likely be a rate increase.
In light of the fact that one of the main risk to the economy is low inflation, quite interesting looking data on the consumer price index, which will be published next week. Also, attention should be paid on retail sales data in the UK. If the figures reflect, albeit small, but the increase in price pressure and increased consumer activity, the pound may continue to grow in the short term. The immediate goal of the upward movement may be a mark 1.4570.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

Oil will be waiting for new catalysts. Forecast for the week on March 14 – March 18

During the week, stocks showed mixed trends. volatility peaked on Thursday when the European Central Bank announced a decision on monetary policy. European regulator resets the key rate and QE program has expanded to 20 billion euros per month. And then the market took with optimism. But at a press conference following the decision, the head of the European Central Bank Mario Draghi stated that he sees no reason to further reduce interest rates at the current conditions that caused an impressive reduction. However, on Friday, stocks still have resumed growth. As a result, a week benchmarks complete “in the green“. The US Dow Jones and NASDAQ for the week were added, respectively, 1.29% and 0.81%. German DAX30 rose by 0.85%. Symbolic increase of 0.33% and Hong Kong demonstrated the HSI.

Demonstrated mixed dynamics and commodity assets. Brent crude oil noted the three-month high, rising to the level of 41.45 dollars per barrel.. Growth on the basis of working five days amounted to 3.54%. Gold (XAU / USD) on Friday reached a 13-month high of 1284.53, but by the end of the day lost all earned. Metals Week concluded with a total of 0.75%. However, weaker-than-expected data on China‘s economy, published on Saturday (industrial production and retail sales fell more than expected), it may return to concerns about the global economic outlook and again cause the asset growth of quotations. Silver (XAG / USD) closed with a symbolic loss of 0.1%.

The economic data of the last week:

  • Monday. Germany: January industrial orders + 1.1% versus – 2.7% in December
  • Tuesday. China: February, 32.59 billion vs. 51 billion balance of trade; exports fell by 25%, imports – by 13.8%
  • Wednesday. The Reserve Bank of New Zealand cut interest rates by 25 bps up to 2.25%
  • Thursday. The European Central Bank cut its key rate to 0% from 0.05%, the deposit rate to -0.4% from -0.3%, expanded QE program to € 80 billion per month against the 60 billion previously
  • Friday. Canada February, the unemployment rate of 7.3% – higher than the forecast of 7.2%

Forecast for the week on March 14 – March 18

Stock market

This week the key event will be the publication of the Fed‘s monetary policy. Although even before this will be published data on retail sales and reports on consumer price inflation, industrial production, as well as building permits issued, which will add clarity about the US economic outlook. It is not excluded that in anticipation of the Fed‘s press conference, these reports will be ignored. In general, the situation is relatively stable develops: the economy continues to create new jobs (242,000 in February against 190,000 projected), business activity in the industry index rose slightly to 49.5 (against 48.2 a month earlier), in services It is held in the growth zone.

But at the same time in the country recorded a slowdown in wage growth, which can act as a deterrent to inflation. Most likely, the Fed will not raise rates at this meeting – according to the rate of the futures positions with a probability of 96.1%, it will remain unchanged. Much will depend on the rhetoric. But here, perhaps, one should not expect aggressive comments. Yellen will try to be the rhetoric so as to leave room for maneuver. If the market will accept the statements of the Federal Reserve as insufficiently aggressive, stocks may continue to grow. Dow Jones (YM) can rise to the level of 17530. Nasdaq (NQ) target the movement to the level of 4480.00.

Commodity and raw market

Brent crude oil prices were fixed within the range of 38.00 – 41.45. To overcome its upper boundary can be difficult without additional catalysts. The fundamental backdrop has not changed radically. But at the same time, there were some doubts about the reality of the meeting of countries – members of OPEC with countries not members of the cartel, which was to be discussed freezing the volume of black gold. At the end of last week, there were rumors that it could not take place because Iran has not yet confirmed its participation in the transaction. Such fears, of course, are the deterrent growth of quotations. However, any information on this subject can cause a spike in volatility. In this case, if the meeting is confirmed yet, of Brent may try to overcome the mark of 41.45, aiming to increase the level of 43.00 dollars per barrel. It is possible that something will clear up on Monday, when the head of the Ministry of Energy will meet with the Minister of Oil of Iran.

In support of the black gold quotes advocates also the fact that the IEA notes the relatively high probability of passing the bottom of the oil quotations. Agency raised its forecast for global oil demand for 200 thousand barrels per day. And at the same time waiting for proposals fall by 750 thousand barrels per day, which exceeds the previously announced 100 thousand and that, in the absence of agreement on the meeting of the OPEC and non-OPEC may keep Brent from falling below the level of 38.00.

Currency market

The coming week could be interesting enough for the foreign exchange market. Monetary policy decision to publish the Bank of Japan, the US Federal Reserve and the Bank of England. However, it is worth noting that probably none of the regulators will not make any changes in monetary policy. Nevertheless, the British pound can demonstrate short-term easing in response to the Bank of England‘s decision to keep the rate and volume of purchases at the same level of assets.

But, taking into account the fact that the British currency in recent times looks oversold, the fall can be a good point to enter long positions. Especially because the probability of the UK from the EU structure is quite low and it can keep the pair GBP / USD from a long fall. In addition, the relatively high probability that the Fed will not raise rates and accompanying statement will be pretty soft to keep the room for maneuver that the negative impact on the US dollar. The target of the growth may be the level of 1.4400.

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

On the prospects of the oil and the decisions of central banks. Forecast for the week on March 7 – March 11

Another week stock indices ended growth. In support made by several factors. This is the People’s Bank of China’s decision to reduce by 50 bps the rate on reserve requirements, and the stabilization of oil prices, and strong enough statistics from the US, which is somewhat reduced concerns about the global economic outlook. The strongest growth was shown by Asian markets. Hong Kong HSI added 4.83%, Japan’s Nikkei rose by 4.44%. Against the backdrop of universal positive and expectations of additional stimulus measures by the European Central Bank increased by 3.2% and German DAX30. The US Dow Jones and NASDAQ for the week were added, respectively, 2.29% and 2.16%. More restrained growth, partly due to fears that the US Federal Reserve on the background of optimistic statistics may decide on another rate hike sooner than expected.

In the currency market leaders broke raw AUD / USD and NZD / USD, appreciated by 4.4% and 2.79%. The Aussie jumped to an annual high of 0.7442. Ozzy has received support from the Reserve Bank of Australia’s decision, and against the background of strong GDP data for Q4, as well as on the background of the overall positive sentiment in the commodities market.

Commodities showed positive dynamics. Brent crude oil jumped to a level of 38.90, adding 9.88%. Copper (HG) rose by 7.11%. Positively dynamic and precious metals. Gold (XAU / USD) strengthened by 2.9%. Silver (XAG / USD) ended the week with a score of + 5.53%.

Chart of the week:

aud / usd chart

AUD / USD chart

The economic data of the last week:

  • Monday. The People’s Bank of China’s lowered by 50 bp to 17% rate on reserve requirements
  • Tuesday. US: February, ISM manufacturing index 49.5 higher than the forecast of 48.5
  • Wednesday. Australia. Q4, GDP 3.0% vs. 2.6%
  • Thursday. UK: February, PMI index in the service sector, 52.7 vs. 55.1
  • Friday. US. February, the number of new jobs created outside the agricultural sector 242 thousand vs. 190 thousand.

Forecast for the week on March 7 – March 11

Stock market

This week US economic calendar does not contain meaningful reports. But the European Central Bank next week will publish a decision on monetary policy that can bring about changes in the dynamics of the German index DAX 30 (FDAX). The European regulator has repeatedly hinted at his willingness to go the extra stimulation. Recent data on the index of consumer prices in the euro area were below expectations. On a monthly basis rate in February fell by 0.2%, signaling a return to deflation.

These figures show that the measures taken are still insufficient for the acceleration of inflation. Therefore, the likelihood of the adoption of new measures aimed at easing of monetary policy, increases. Against this background, it is possible the resumption of growth in the German benchmark level of 9980.0 district. Of course, buying at current levels may look fairly risky. But even before the decision the European Central Bank will be published data on industrial production in Germany, as well as a revised report on the rate of growth of the European economy in the 4th quarter. The weaker figures than expected, it may trigger a rollback in the DAX 9600.0 district level that can provide a good opportunity to enter into short-term long positions.

Commodity and raw market

Brent crude oil prices are slowly but surely moving towards its goal. The black gold has tried to gain a foothold above $ 37.00 and the closing weeks he did it for the entire week. Quotes jumped to the level of 38.90. The fundamental backdrop has not changed radically. The market is still waiting for a meeting of OPEC and non-OPEC, whose synergies need to be agreed upon, at least in terms of production freeze. Despite the fact that so far there is no clear information about when and where the meeting will take place, the market is optimistic. And this optimism is fueled by the fact that the major oil-producing regions are ready to look for compromise solutions.

Also, for the benefit of oil quotations and are data on US production volumes. The indicator shows a decrease for 6 consecutive weeks. It is possible that this trend will continue, since the number of working drilling in the country has decreased by 75% from the highs registered in 2014.

Risk factors for the “black gold” in the coming week may make the traditional short-term forecast of the EIA report, and demand and supply of oil on the world market. Signs of growth in net supply may have a short-term pressure on Brent, but this time can be regarded as a good opportunity to enter long positions as before the announcement of results of the meeting of oil-producing countries, oil will gradually move up, aiming at the level of 40.00 dollars per barrel.

Currency market

This week the decision on the monetary policy of the Central Bank will publish just three: the Bank of Canada, the Reserve Bank of New Zealand and the European Central Bank. A possible solution of the latter has been discussed quite a lot, so touch on the Reserve Bank of New Zealand and the Bank of Canada.

New Zealand regulator at the last meeting made it clear that in the future may require a further easing of monetary policy. Also, the Reserve Bank of New Zealand, said the need to reduce the New Zealand dollar. It is worth noting that since the January meeting kiwi rate increased by 5.9%. The pace of economic growth continued to slow, the price pressure increase is only 0.1% (which is far from the target). In addition, despite the stimulus measures that the Chinese government carried out, further cooling the risks of China‘s economy, still remain. And this is an additional reason for concern with respect to the New Zealand economy. Thus, it is possible that the Reserve Bank of New Zealand may decide to mitigate already at the next meeting. But even if this does not happen, quite an important role will be played by comments of officials. Even a little hint of what the current exchange rate of the New Zealand dollar is dangerous for the economy, it may be sufficient that the pair NZD / USD pulled back to the area of ​​the level of 0.6640.

USD / CAD has recently showed a downward movement, largely in response to the dynamics of oil prices, on which pretty much depend on revenue to the state budget (the oil sector generates about 30% of the revenue part). Even after a session of January 20 the market expected a rate cut to the level of 0.25%, but this has not happened. By the current moment the situation has stabilized in the oil market, which may keep the Canadian regulator of additional easing in this time. The limiting factor may also perform the latest inflation data. In January the indicator reached 2.0% in annual terms. Reduced rates can strengthen it. If after a meeting of the rate will be maintained at 0.5%, and the text accompanying statement will contain at least some optimistic notes, the pair USD / CAD may continue to decline in the level of 1.3220 area. An additional condition for the growth of the Canadian dollar could act and preserve positive dynamics of oil prices.

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