Monthly Archives: June 2016

Brexit. What to do next!? The forecast for the week June 27 – July 1

Yes, the past week was dominated by the British referendum. As expected, however, many of the results expected almost the opposite. GBP / USD has experienced the biggest collapse of a 30-year history: the pair touched 1.3225, but closed trading near 1.3654. In parallel with this growing yen, received good support in the form of flight to safe assets. GBP / JPY, for example, lost 6.43%, while the GBP / USD only 4.8%.

It was dominated by the sale of the equity markets, and in the lead, quite predictably, turned EURO STOXX 50, rolled down by 3.75% down. Brent came under pressure and stuck near 48.40, but the precious metals used in high demand. Gold has added 1.30%, while silver – 1.48%.

Chart of the week:

GBP / JPY chart

GBP / JPY chart

Economic data of the previous day:

  • Britons voted for withdrawal from the EU
  • Janet Yellen reiterated its uncertain stance on rates
  • Minutes of the last meeting of the Reserve Bank of Australia confirmed the low chances of a rate cut in the near future

The forecast for the week June 27 – July 1

Stock market

Week ahead – is the week of stabilization and the search for new investment decisions. How to live after leaving the EU – it is the question everyone will be trying to answer. And on the surface of the answers: the current dynamics of the stock market says that benefited from all that is happening … it is the British FTSE (Z). It is clear that his role is played by the fall of the national currency, which promises a more competitive environment for the corporate sector in the market of goods and services. However, among other things, the market has started to price the probability of additional stimulus the British economy in connection with an event, and for the FTSE may talk about the medium term, a gradual strengthening. The index can still bend in the area of ​​5930, but this is the level at which it is worth buying for the purpose of 6140 to the end of the week.

Commodity and raw market

Brent remains under pressure because of obvious factors. The first flight of the risks shows distrust of the global pace of the economy, and hence to the recovery of the global demand for energy. Second, the growing interest in the US dollar in the last trading session, creating unfavorable conditions for the USD denominated in the dynamics of oil.

To understand what to put on, it makes sense to determine the measure of the influence of two similar factors. Investors’ concerns about the pace of global economic growth can be maintained in the coming weeks that will limit the rate of growth of Brent. All attempts to strengthen the oil will give rise to a serious rebuff. This is a negative factor. Flight from risk means demand for safe-haven currencies, among them the US dollar. And yes, in this case, Brent every chance to remain under pressure, that does not mean that the reports on oil reserves from the API and Energy Ministry will not be influenced. Yes, of Brent could make an attempt to consolidate above 50.00, but they will be followed by corrections.

Currency market

And on the GBP / USD. Yes, we have seen a massive fall in the pair and relatively large-scale correction. What will prepare us a couple at the next week? Most likely, a new wave of sales. Primary drop reaction was understandable. Secondary correction up too – profit taking at the end of the trading week. What will be the subsequent reaction? After short-term thinking and weighing the “pros” and “cons“, it becomes apparent that the UK will build the world anew. But that takes money and incentives. And then, the Bank of England policy will be particularly soft. And, then, GBP / USD is worth selling. It is possible that the pair may once again go to the area of ​​1.33 during the week.

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

THE POUND may rise. Forecast for the week on June 20 – June 24

Stock indices finished the week in the “red“. The main factor of pressure on the benchmarks were Brexit concerns. But apart from this disappointment the US indices have added comments and the head of the US Federal Reserve after a meeting of the Monetary Policy. Overall, Yellen expressed uncertainty about the stability of the economic recovery. As a result, Dow Jones finished the week down 1.61%. NASDAQ lost 2.29%. The German DAX 30 fell 1.05%. Asian indices for the week were in the largest decline. Hong Kong HSI fell 3.51%. Japanese Nikkei (NKD) closed with a result of -4.52%, largely due to inactivity regulator at the last meeting, which made it clear that is not to interfere, despite the significantly strengthened in recent years the yen to keep the room for maneuver in event of the UK from the EU.

On the currency market the USD / JPY has lost 2.6% on the theme of flight from risky assets. Quotes reached a 22-month low of 103.54. Quotes GBP / USD fell to the lowest since April 2016, but later the pound managed to recover and as a result even rose by 0.71% on the week.

Brent crude oil declined to a level of 46.94 dollars per barrel, but the closure of the week regained some ground. At the end of five days the energy carrier is losing 2.08%. Rollback is not prevented even data from Baker Hughes, reflecting the continued growth in the number of drilling rigs operating in the US (+ 9 units). Precious metals continue to rise due to lower interest in risky assets. Gold (XAU / USD) increased by 1.92%. Silver (XAG / USD) added 0.96%.

Chart of the week:

USD / JPY chart

USD / JPY chart

The economic data of the last week:

  • Monday. China: May industrial production of 6.0% vs. 5.9% expected
  • Tuesday. US May retail sales + 0.5% vs. + 0.3%
  • Wednesday. Janet Yellen on the FOMC meeting sounded neutral, refraining from hints at further rate hike
  • Thursday. The Bank of England unanimously kept monetary policy unchanged
  • Friday. Canada: May consumer price index of 0.4, 1.5% vs. 0.5%, 1.6%

Forecast for the week on June 20 – June 24

Stock market

In connection with the upcoming referendum in the UK, the volatility in the market may be increased, and therefore the time-changing trading conditions. Although after supporters of both positions agitation stopped, the situation may be somewhat stabilized until the arrival of voting. But, if we abstract from this event, there are a lot of interesting things. In particular, the US was to publish a rather large block of statistics. This data on business activity in the service sector and the industrial sector from at Markit and report on sales of existing homes and new home sales, and data on orders for durable goods.

Once Janet Yellen at a press conference after the publication of the rates decision, made it clear that the regulator is not sure of the stability of the rate of US economic growth, with special care the market will evaluate all incoming information to try to estimate how soon the Fed may go on rate increase. Short term, weak statistics could put pressure on US stock indexes. However, if the British vote for the country to remain in the EU, the stock market can breathe a sigh of relief, and it is possible that the benchmarks will show growth. Dow Jones (YM) may return to the level of 17900. NASDAQ (NQ) is able to get up to the area level of 4470.0.

Commodity and raw market

Oil a large part of last week remained under pressure, which is not surprising against the background of the impressive fears caused by the output probability of the UK from the EU. In fact, the results of voting in the country may also influence the energy source in the coming week. But, most of all, what so afraid of the markets does not happen and the country will remain in the EU. Consequently, Brent can get tangible support. Especially because a large number of reasons for the drop in prices below the level of 47 dollars per barrel, in general, no. Of course, the market is still afraid of returning shale projects.

But for this to happen, first of all, take time, and secondly, is, at best, will reopen old as for new investment projects in this sector is still too high degree of uncertainty. In the meantime, the volume of production in the US continue to decline (-29,000 barrels). In addition to the traditionally British referendum will follow the data on commercial stocks in the United States and data on the number of operating rigs. But even the positive dynamics of indicators is unlikely to be sufficient to ensure that Brent has updated the recent highs. Most likely, the black gold will remain in the range of 47.00 – 52.83.

Currency market

Results of the referendum in the UK may be affected, first and foremost, to the European currency. Just look at the dynamics of the euro and the pound, which was the last working day of last week showed an increase only on the cessation of agitation against the supporters of the country to remain in the EU and their opponents. Therefore, if all the same it is decided to retain membership in the European Union, and the pound, and the pan-European currency can demonstrate growth against the dollar. The fact that the consequences for the UK economy in the case of the EU will be quite heavy, and given the close trade relations with the euro area, the latter also have to feel the all the “charms” of such a decision. Moreover, it is possible that such a development will push the eurozone into recession. Thus, provided that the majority vote in the EU “for” GBP / USD pair could easily return to the level of 1.4500 and further to 1.4730. In EUR / USD will also be glad to growth with the primary purpose at the level of 1.1400.

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

The labor market is mixed cards Fed US. Forecast for the week on June 6 – June 10

Stock indices have experienced a difficult week. Moderate positive at the beginning after the release of US data gave way to an impressive decline, but the closure of the US indices were able to recover some of the losses. As a result, Dow Jones fell by 0.34%. NASDAQ lost symbolic 0,13%. The German DAX 30 fell 1.75%, despite the fact that the outcome of the meeting of the European Central Bank Mario Draghi made it clear that if necessary, the regulator is ready to go for additional stimulation. Down the index pushed the euro sharply entrenched. By strengthening the national currency has suffered and the Japanese Nikkei. The benchmark ended the week with a score of -3.52%.

Friday’s labor market data and business activity in the US service sector weakened the dollar across the board. The strongest growth has shown a pair NZD / USD, add 3.81%. USD / JPY plummeted to 3.41%, down to the level of 106.52.

Brent crude oil finished the week below $ 50.00. At the end of five days the energy carrier is losing 0.56%, including under the influence of the lack of action on the part of OPEC quotas. Precious metals were able to recover part of the losses incurred earlier. A key factor of support were weak data from the US, which change the expectations for Fed monetary policy, at least for the next month. Gold (XAU / USD) increased by 2.61%. Silver (XAG / USD) added 1.05%.

Chart of the week:

USD / JPY chart

USD / JPY chart

The economic data of the last week:

  • Monday. Canada: in April, the price index for manufactured goods -0.5% vs. + 0.2%
  • Tuesday. Germany: in May, the unemployment rate of 6.1% vs. 6.2%
  • Wednesday. Australia: Q1 GDP + 1.1%, 3.1% vs. 0.8%, 2.8%
  • Thursday. The European Central Bank kept its monetary policy unchanged. But Draghi has hinted at the possibility of additional incentive
  • Friday. US. May the number of new jobs created outside the agricultural economic sector 38 thousand vs. 164 thousand

Forecast for the week on June 6 – June 10

Stock market

Until Friday the market was tuned to the fast increase in the Fed rate. However, published data on the number of new jobs created outside the agricultural sector in the US, these expectations have changed somewhat. The figures were significantly worse than expected (38 thousand against 164 thousand..), And after the state of the labor market – one of the main criteria that the Fed takes into account when evaluating the possibility of changes in monetary policy. According to the rate of futures positions, the probability of keeping it at the level of 0.5% in June of 96.3% and 66.4% in July. However, in the beginning of the week can work normally, “the bad news – good news“. After all, as a whole, with the exception, perhaps, of the banking sector, low interest rates for the stock of assets – a positive factor. Against this background, it is possible that the US indices resumed their growth. Dow Jones (YM) in this case, may come back to the district level 17900. NASDAQ (NQ) – to the level of 4530.0. Of course, it contributes to the dynamics of indexes can make a statement and Janet Yellen, scheduled for Monday. It is interesting, how to change the head of the Fed‘s rhetoric after such weak figures.

In recent years, the pressure on stock index Nikkei (NKD) strengthened against the strengthening yen, which was further warmed dollar weakness. However, already in the next week the benchmark may still turn around and start growing. This may be quite weak data only in terms of national economic growth in Q1. Signs of a further slowdown in GDP recovery may strengthen expectations of more stimulus measures from the authorities. In particular, the postponement raising the sales tax it became known last week, but this is most likely the government, which is necessary to stimulate private demand, not limited. Therefore, after an initial decline, the Nikkei could return to the area of ​​16820 level.

Commodity and raw market

Oil last week received by OPEC pretty clear signal that the cartel in the near future is not going to limit the production and thus have an impact on energy prices. Of course, something like the market and waited, but such decisions are for some time delay to achieve a balance of supply and demand on the world market. This means that for a long impressive growth of quotations of Brent is not worth it. Especially because the price fixing at relatively high levels can lead to a resumption of shale oil in the US, which will only increase the volume of supply of primary energy.

Although in the short term, provided that the data on commercial stocks in the United States will signal further reductions (recall that in the last 2 weeks, this figure is reduced, as well as production in the United States), short-term attempts to growth in the region at 52.50 provided break recent highs at 50.95, very real. Especially because in Nigeria while tensions remain. Rebels threaten to reduce the supply of oil from the country to the ground, which can also provide moderate support energy carrier. However, these upgrades can be replaced fairly resolute Closeouts. Therefore, Brent, is likely to hold in the range of a week.

Currency market

Again, it is impossible not to touch on the Australian dollar. Statistics published last week signaled that Australia‘s economy fairly quickly adapts to the current adverse conditions. The volume of exports has exceeded expectations. Building permits rose by 3% in April. Positives added and data on the growth rate of the economy in the 1st quarter. The indicator came in at 1.1%, 3.1% vs. 08%, 2.7%. These figures call into question the need for additional action in the direction of the stimulus. Therefore, scheduled for next week meeting of the Reserve Bank of Australia may well be a pleasant surprise in the form of a constant level of rates and accompanying statement rather optimistic. And it can give the pair AUD / USD an additional impetus to growth with a view on the level of 0.7400.

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