Oil may remain under pressure. Forecast for the week on May 9 – May 13

By | May 8, 2016

Trying stock index earlier in the week to develop upward correction fiasco and they resumed falling. Part of the reason became aggressive comments from the US Fed Lockhart and Uilms, which made it clear that permit a rate increase in June. Negative colors added and insufficiently strong statistics from China and the United States, which only heightened fears about the global economic outlook. But the closure of the indices nevertheless regained some of the losses. As a result, US Dow Jones and NASDAQ completed its practically unchanged, losing 0.17% and 0.07%, respectively. The German DAX 30 fell 1.82%. The American fell by 2.94%. The fall of 3.51% showed Hong Kong HSI.

On the currency market the week was marked by the strengthening dollar and weakening commodity currencies, came under further pressure on weak macroeconomic statistics. As a result, AUD / USD lost 3,16%, NZD / USD slipped by 2.09%. Pair USD / CAD showed growth of 2.82%. It is worth noting that the Canadian dollar suffered the negative impact from falling oil prices.

Over the past week, Brent crude oil fell by 4.69%, which is not surprising against the background of information on the growth of production in the OPEC countries. Quotes energy source down to the level of 45.30 at the close. Weak statistics from China, which is the largest consumer of copper in the world collapses red metal quotations by 5.5%. Precious metals, which earlier in the week updated highs since January last year developed a law-governed downward correction. Gold (XAU / USD) lost 0.36%. Silver (XAG / USD) fell by 2.02%.

Chart of the week:

Copper chart

Copper chart

The economic data of the last week:

  • Monday. US: April index of business activity in the manufacturing sector (ISM) 50,8 against the forecast of 51.8
  • Tuesday. Reserve Bank of Australia lowered the rate to 1.75% from 2.0% previously
  • Wednesday. US. April, the level of employment in the private sector from the ADP 156 thousand vs. 196 thousand.
  • Thursday. UK: April, the PMI index in the service sector 52.3 vs. 53.5
  • Friday. US. April, the number of new jobs created outside the agricultural economic sector 160 thousand vs. 200 thousand.

Forecast for the week on May 9 – May 13

Stock market

The report on the US labor market has left mixed impressions. On the one hand, it is not up to expectations reaching figures on the number of new jobs created (160 thousand. Vs. 200 thousand.). Thus, we can say that the state of the US economy is still not stable (remember even the US GDP growth in the first quarter at 0.5% – the lowest level in 2 years) and therefore the Fed less reason to hold another round of monetary tightening. However, the average hourly wage in annual terms increased by 2.5% compared to 2.3%, reflecting the rise in inflation at this level. And it’s still theoretically could push the Fed to raise rates in the near future. In light of the assessment of inflation expectations can be quite interesting data on producer price index, published on Friday.

The report is often viewed as a leading indicator of consumer price index. In the case of growth, the market may start to be put on the strengthening of cost pressures and the possibility of a rate hike. In addition, attention should be data on US retail sales. Even the figures in line with expectations may reinforce expectations of an early tightening. The first reaction of US indexes on Statistics can be strong growth as reinforce expectations of economic stabilization and, hence, give reason to expect growth in corporate profits. But later Dow Jones (YM) and NASDAQ (NQ) can turn around and begin to decline, fearing tougher stance of the Federal Reserve. Against this background, benchmarks can target the movement, respectively, to 4195.00 and 17350. In addition to statistics, it is not necessary to exclude from the field of view and comments from US regulator: Evans, Rosengren, George Williams. Their aggressive attitude will only increase the pressure on the indices.

Commodity and raw market

Brent crude oil remained under pressure throughout the week. Once the energy source is not able to gain a foothold above the level of 48.00, began an active profit-taking as the market has accumulated a sufficiently large number of long positions in crude oil, according to CFTC data. The fundamental backdrop has not changed radically. News of the production capacity of OPEC oil countries offset information about its incidence in the United States and fears of supply disruptions from Canada, where raging wildfires. And yet to say that the potential fall completely exhausted, perhaps prematurely.

Technically, Brent may fall to the level of 43.90 with the next target area at around 42.50. Update highs without new catalysts black gold is unlikely to succeed, but they will likely not appear until the June meeting of OPEC (although from this side to wait for surprises is not necessary). So while each new rise in the short-term may be accompanied by Closeouts. If we talk about interesting market reports oil, the next week will be published data on the global oil supply and demand in April. If the imbalance rise will be fixed, Brent could accelerate the fall.

Currency market

Last week, the British pound updated 4 months maximum was followed by the fall of almost 3.5 figure. Of course, this is not enough and pushed a strong statistics on the index of business activity in the industrial and construction sectors and services. This week the dynamics of the GBP / USD pair may lead to a decision of the Bank of England’s monetary policy. Almost no doubt about the fact that the regulator will keep it unchanged. However, particular interest will cause the balance of votes. If, among the representatives of the committee will be at least one supporter of easing monetary policy, pound it can have an impressive pressure. Especially because the British currency is still influenced by concerns about the effects of Brekzita. Negativity can add and quarterly inflation report, provided that inflation forecasts will be lowered. Taken together, these factors could send GBP / USD in the area of ​​the level 1.4300 with a further target at 1.4230.

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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