13 December, 2016
The oil prices jump 5% on Monday as the Non-OPEC countries settle on a deal to cut the output by 558K barrels. Russia commits to slash production by 300K barrels/day, which is more than half of the current production. Gains on both benchmarks are past 5% rising to the levels of July 2015.
As the current rally is propelled exclusively by the market’s euphoria over the termination to end the exhausting price wars. But focusing on further growth can be tricky, as it will ride on the supply changes and the demand caused by output cuts.
The US Dollar starts its week with a slide in the run-up to the FED December meeting, which has high expectations of a rate increase by 25 b.p. According to the CME futures data as of December 9th, the market’s projection is at 94.9% for the rate hike in the upcoming meeting and for July 2017 the increased certainty is at 43.6%. Opposing this positive outlook has been Yellen’s tone, which brings uncertainty and sends the USD to trade 0.16% lower than the Fridays close.
The European currency seems to move away from the pressure coming after the ECB decision to prolong the QE. Euro rose 0.34% against a basket of other majors, EUR/USD advanced 0.34% consolidating near 1.06 level.
The British currency failed to sustain above the 1.26 level, as concerns over the terms of the UK leaving the European Union kerbed the rally attempts. Last week the currency was rising to 1.2750 against the US Dollar but declined the level of 1.26 level, as the EU single market access prospects remain unclear.
JPY extended declines, as investors continue to drift away from the low-yield assets and are instead returning to the energy equities. USD/JPY tested 116 level accelerating the decrease ahead of the increase in the US borrowing costs.
The bullion drops 0.3% ahead of the FED meeting, as higher interest rates dampen the appeal of the safe heaven.
Commodity producer equities
The commodity producer’s stocks surged on the non-OPEC producers deal. Russian Rosneft added 4%, Gazprom rose 5.47%, Lukoil +3.05%, boosting Russian RTS index by 3%. UK Royal Dutch Shell rose 3.4%, BP gained 2%.
The Pound collapsed 0.6% after the UK Prime Minister Theresa May...
The U.S. Dollar let the Euro take a significant lead...
The Canadian dollar has approached the 3rd point of the descending channel on the weekly chart. In the daily chart, the price has touched the horizontal level of 1.3387 in the form of a shooting star. Therefore, we should sell the pair at the market opening...
The plan successfully passed through the upper chamber and is now going to the committee stage where it’s likely to be amended to warrant better relations with the EU...
ECB Draghi is to address the parliament today and investors will be waiting for any hints on changes in the monetary policy. On the press-conference during the last ECB meeting the future seemed quite downbeat on the EU economic growth, while leaving QE without revisions...
The time has come to sell the Euro. The main scenario includes a pullback and testing the level 1.0764 with a further drop up towards the level 1.0659. Although, a drop may keep extending even further...
Bank of Japan stood pat on the meeting leaving the short-term and long-term policy rates unchanged at -0.1% and 0.0% respectively. BoJ head Kuroda is yet to clarify the further steps on pumping money into the Japanese economy at the press conference aimed towards stimulating the consumer spending and inflation...
Markets started the week with no sharp changes and lower trading volumes, due to the Martin Luther King Day in the US, ahead of the crucial monetary policy decisions of the ECB and BoC...
The rally of the American currency fizzles out, as FOMC Minutes release failed to surprise the markets. In the December´s speech Yellen emphasized the importance for the FED to keep pace with possible economic expansions during Trumps presidency...