22 May, 2017
Keep up to date with metals, oils, indices, bonds, equities and agricultural commodities in our Beyond Forex analysis. With a lot of news coming out of the United States and the UK, there have been some observable trends developing; some more beneficial than others. Also visit our economic calendar to learn about this week’s latest and most significant economic events.
The big event to watch for this week is the Opec meeting in Vienna on Thursday, where expectations are running high that an agreement will be reached to extend the production cuts we saw brought in at the start of the year. However although Saudi Arabia is leading the drive and Russia is proposing cuts too, there’s a real risk that smaller producer nations – both within and beyond Opec - could reject the proposals, if not immediately then at least by refusing to sustain quota cuts into 2018.
The Eurogroup – the term given to the finance ministers of Eurozone countries – convenes on Monday and Greece will be high on the agenda. At the time of writing, it’s believed there’s only a 50% chance that the group will be prepared to sign off on the next bailout tranche to Greece. There’s still time to find a way ahead before that big repayment round of EUR7.4 billion falls due in July, but European equity markets could be panicked by further hesitation from the Eurogroup, with indices of the fringe economies – like Italy’s MIB an Spain’s IBEX – potentially vulnerable.
The safe haven qualities of the precious metal could be thrust into the limelight if we continue to see talk of President Trump’s possible impeachment. Critically Republican lawmakers have now been voicing the idea, although the timing here remains difficult to call. A special investigator – a former FBI chief – has been appointed to look into the situation and the fact he’s widely supported by politicians from both sides suggests that the right call has been made here. Conversely if Trump is exonerated then the precious metal could take a nose dive.
Cocoa prices are somewhat depressed at the moment which is creating a headache for West African economies but there seems to be a belief that El Nino conditions could lead to a drier than normal summer for the region. Prices have bounced off last month’s lows but cash prices are still around one third lower than they were a year ago. Any suggestion that we could be facing a crop shortage will obviously drive prices higher – those African weather forecasts may be worth watching.
Again looking back at the Greek debt crisis, failure for the Eurogroup to reach an accord here could leave some equities struggling, although any overreaction by banking stocks could create a quick buying opportunity. Italian banks like Unicredit reportedly had EUR6billion worth of exposure to Greek debt in 2010, but this figure had been scaled back significantly through a combination of write downs and selling the bonds on. A sharp sell off for Unicredit if there’s negative news from the Eurogroup could create a short term buying opportunity.
Thursday sees the first revisions to UK Q1 GDP data and given the mixed bag of data we’ve seen out of the UK of late, this could provide some fresh direction. Yields had been falling on the UK 10 year gilt but last week’s big spike in retail sales has delivered some support. Any upgrading of the GDP figure could see further speculation over the Bank of England needing to tighten policy, which in turn will push yields higher, too.
Hawkish or Dovish, well today we have retrospective examples of its effect on the sentiment for a currency. In one case Yellen’s indication that national debt should be capped and that monetary policy should be gradual...
This is a notable day for several interrelated moves: the fall of the yen, the rise of the dollar, and the drop in precious metals. All these changes resulted ...
Although markets seemed to calm after last week’s activity, this doesn’t mean that the newsrooms are quiet. One of the big topics – is Deutsche Bank’s big derivative loss estimated at $60 million due to a risky bet placed on U.S. Inflation. According to Bloomberg.com...
Italy arranged for one of the biggest bank rescues in history, with a cost of up to 17 billion euros ($19 billion) in order to wind up two failed banks in one of Italy's wealthiest regions. However, the deal- which was approved by the European Commission...
Yesterday we saw a continuation in the drop of oil prices, which rippled out into the markets – pulling down both US and European StockÂ with it. This is likely a result of fears due to the non-OPEC countries ramping up production to cover the gap left from the OPEC+ agreement to restrict production...
Although not an outright conflict, the discussions surrounding the Brexit talks have been at best contentious and at worse...
The previous week's economic calendar had the potential to destabilize some of the world's most traded currencies...
The US dollar is showing signs of recovery against other major currencies, sans the GBP. After the Bank of England Meeting Minutes announced an increase of interest rates, GBP/USD prices saw a significant upswing. This resulted in GBP climbing from 1.2696 to roughly 1.2755...
The US dollar saw a rapid drop of its price opposite other major currencies after the announcement of the less than positive and expected statistics regarding U.S. inflation and retail sales. Retail sales dipped significantly to 0.3% in May down from the 0.4% rate of the previous month...