29 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.
Tuesday 30th sees the release of the US Personal Core Expenditure Deflator, which is what the Federal Reserve uses as its preferred measure of inflation. We’ve seen a run of slightly softer that expected economic data coming out of the US in recent weeks so with the next FOCM meeting looming, another shortfall here could easily see that idea of another rate hike being side lined, leaving treasury yields to sell off as a result.
The Opec summit last week certainly rattled markets, despite the outcome being the best-case scenario that anyone had dared to envisage. This could mean that the resulting sell-off will be left looking a little overdone, although the longer term risk is likely to be storage limitations in the US, where rapid acceleration of shale oil production risks causing some issues. Watch for the Cushing crude oil inventory release, which is on Thursday next week owing to a US holiday on Monday. A big build here could heap further pressure on WTI Crude.
Italian banks are in trouble again and the government is trying to find a way to help them navigate out of the mess without breaching strict EU rules on state subsidies for lenders. One option is to try and encourage other domestic banks to invest in those that are struggling, although this sort of approach failed spectacularly in the UK amidst the credit crisis when Lloyds backed HBOS. Developments here could weigh further on the likes of UniCredit SpA if the government appears to be applying too much pressure.
Coffee prices may see some support in the short term off the back of USDA reports that the 2016/17 growing season will produce a smaller than expected harvest, but early indications are already painting a more upbeat picture for the next crop. Vietnam – the world’s largest producer of Robusta coffee – saw good rainfall in March, which should help when harvesting begins in September – so long as excessive rainfall later in the year doesn’t cause damage.
The UK general election takes place on June 8th and when this was called right after Easter by Prime Minister Theresa May, the expectation was that the incumbent Conservative party would win by a healthy margin. This doesn’t now seem to be the case – the lead in the polls is closing and bookmakers are offering odds of 18-1 that a majority of around 100 seats will be returned – something that was seen as good as guaranteed last month. Markets don’t like uncertainty so further narrowing of the poll lead can be expected to deliver more weakness to the FTSE-100.
We’re seeing a run of dollar weakness so this would have the potential to inflate gold prices given the usual correlation between the two. However, on top of this we have rising geopolitical uncertainty – the heat will still be on Donald Trump when he gets back to Washington next week over that FBI investigation into alleged Russian ties - so any move for safe haven assets will provide even more upside here.
The H4 the price was unable to consolidate below 1.1400 (or see a 23.6% correction) of course this doesn’t mean that the currency pair won’t see a correction soon. If the pair surpasses 1.1400 near the intersection with the limit of the upper fan...
Compounding the effect was a slip in retail sales fell continuing last month’s trend. Estimates gauge the possibility of another rate hike at under 50%., of course this is a disparate position from FOMC’s plan to commit 4 increases by 2018...
The currency strengthened opposite the JPY and EUR, but slipped opposite AUD and GBP. Janet Yellen head of the FRS went on record in front of Congress pointing out the US economy’s positive trend which in turn will affect the Fed’s interest rate stance...
The US Dollar floundered against most other FOREX currencies yesterday. The only currency that fared worse than the dollar (resulted in the USD strengthening against it) was the EUR...
This week, the dollar is starting off on a strong note as US interest rates continue their increase from Friday. For example, 10-year yields...
Our four-hour chart is showing Tenkan-sen under the Kijun-sen, both while being horizontal. Chikou Span confirmative line bisects the chart from below, indicating a descending cloud reversing into ascension. XAU seems to be trading over both the Tenkan-sen and Kijun-sen...
Mario Draghi shook up markets on Tuesday by announcing victory against deflation and stating that policy needs to gradually normalize...
It seems that investors confidence in commodity currencies were renewed as their prices grew while the safe-havens...
The four-hour chart above clearly shows the Tenkan-sen line crossing the Kijun-sen from the bottom of the chart, we also see the blue line moving downwards, while the red is holding horizontally. The Chikou Span confirmative line is moving towards the bottom of the chart, indicating a descending cloud...