Whether oil will be able to grow after a meeting in Doha. Forecast for the week on April 18 – April 22

By | April 17, 2016

Week growth stock indexes finished. The most significant strengthening of the Japanese showed the Nikkei, which rose 5.51%, which was partly due to the depreciation of the yen against the dollar, as well as increased confidence in the fact that the Bank of Japan can go to expansion of economic incentives at the end of April. Positive statistics from China supported the Hong Kong HSI, who added 4.81%. Against the backdrop of the weakening euro increased German DAX 30. The benchmark added 4.66%. The US Dow Jones and NASDAQ rise by 1.81% and 1.48%, respectively. Their growth has been supported by more weak data on consumer price inflation in the United States. In annual terms, figure grew by only 0.9% against the forecast of growth by 1.2%. This price pressure dynamics gives reason to believe that the Fed still will not hurry with tightening.

Against the background of positive statistics from China showed growth of commodity currencies. AUD / USD has added 2,09%, NZD / USD rising 1.48%. It is said that the additional support received from the Aussie’s own macroeconomic statistics – came relatively strong labor market data. The unemployment rate fell to 5.7% vs. 5.9%, and the economy created 26.1 thousand jobs (forecast 20 thousand).

On commodity markets, Brent crude oil has shown impressive growth, rising to the level of 44.93, but on Friday on profit taking in the run-up to the Doha meeting at the weekend, has lost part of the earned. Quotes energy source for the week rose to 2.99%. Precious metals showed mixed trends. Gold (XAU / USD) ended the week in the level of 1233.44 dollars per ounce region, losing 0.87%. But Silver (XAG / USD) increased by 5.4%, rising to the highest level since June 2015 (16.314).

Chart of the week:

Silver chart

Silver chart

The economic data of the last week:

  • Monday. China: March, CPI -0,4%, + 2,3% vs. -0.3%, + 2.5%
  • Tuesday. United Kingdom: March, the CPI + 0.4%, + 0.5% vs. + 0.3%, + 0.4%
  • Wednesday. US March retail sales -0.3%, lower than the forecast of + 0.1%
  • Thursday. The Bank of England kept interest rates at 0.5% unanimously, although there were rumors that two MPC members tended to decrease
  • Friday. China. 1Q, 6.7% of GDP in line with the forecast of 6.7%

Forecast for the week on April 18 – April 22

Stock market

This week could be interesting for the German DAX 30 index (FDAX). Benchmark crept quite close to a fairly strong resistance he could not 10,150.0, above the rise since January this year, partly due to the depreciation of the pair EUR / USD. Technically, this level will break open the way up to the level of 10600.0. An additional incentive for the growth of the index can be a publication of the decision the European Central Bank’s monetary policy. Actually, not the publication itself, and the press conference of the European regulator.

Do not be amiss to recall that, as it became known from the minutes of the last meeting, when the European Central Bank expanded its asset purchase program to 80 billion euros, has lowered its key interest rate to 0, and to deposit 0.4%, during the discussion of options were considered, and more aggressive easing. So, if Mario Draghi will hint at the possibility of action in a similar direction in the near future, DAX can get additional support, as the possibility of additional stimulus is always a favorable impact on the dynamics of the stock of assets. In addition, hints of additional easing and may have additional pressure on the euro, which will also contribute to strengthening the position of the benchmark.

Commodity and raw market

Brent crude oil next week will move under the influence of the results of the meeting, which will take place on Sunday in Doha. Much will depend on what the decisions of the OPEC meeting in the format + delight. Most likely, no radical solutions, we still do not see. It will probably be agreed to freeze oil production at the level of January 2016 without the participation of Iran in this agreement. Such an outcome is widely expected, so the first reaction of the oil may be a reduction in the area of ​​the level 39.00 – 40.00 dollars a barrel amid profit taking. The fact that such an outcome would not result in a rapid reduction offers on the world market, and thus, imbalances will persist. In the future, though it is possible the resumption of growth in the area of ​​recent highs. Such an agreement will still be able to help the black gold to stabilize at relatively high levels (40, 00 – 45,00), and in the medium term up to around 50.00.

If Saudi Arabia decides not to join the agreement, taking into account the position of Iran, which plans to increase production volumes up to the levels of sanctions, of Brent and may be under pressure more impressive. Against this backdrop, prices could fall quite quickly to the level of 35.00. However, a deeper fall may not happen because a new wave of reduction of prices for black gold will contribute to the extrusion market companies engaged in oil shale extraction. But in this case, the resumption of growth appears to be a fairly distant prospect.

Currency market

Taking into account the fact that the Canadian economy as well as Russia, are quite dependent on oil prices, an interesting dynamic, and can show the pair USD / CAD in the coming week. Recall that about 30% of the budget of Canada is formed by the proceeds of oil and gas industry. Thus, after the output couple can demonstrate a fairly impressive growth on the back of lower oil prices after a meeting in Doha, of course, if she did not bring surprises. The primary goal of the movement can become a mark of 1.2970 with a further target at 1.3130. In addition, at the end of the week will attract attention and data on the index of consumer prices in Canada. If the index show growth, this will convince the market that in the short term, the Bank of Canada will not reduce the rate, as it did at a meeting last week. Coupled with forecasts increase control the rate of growth of the national economy up to 1.7%, it can give “Canadian” stimulus to the restoration of the lost positions.

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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