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

By | June 5, 2016

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.

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