Weekly Market Review – May 9–13 2016
U.K. Rate Decision on Thursday 11:00 GMT will be this week’s main event
By the end of the week all major currencies showed a decline against the USD. The largest of which was the Australian dollar, dropping -3.04%. Other drops included the Canadian dollar (-2.85%), New Zealand dollar (-1.99%), Swiss franc (-1.37%), British Pound (-1.22%), Japanese yen (-0.80%). The smallest drop was the euro at -0.37 %. Throughout the week, the US currency yielded mixed results against its major competitors, but showed overall growth on the week. Trading dynamics were impacted by the anticipation of Friday’s NFP report. Additionally, market participants paid a lot of attention to Wednesday’s ADP report on the US labor market. Despite the fact the both reports underwhelmed, the USD wasn’t hurt severely. Support for the US currency came about as US Fed leaders stated there is a strong possibility that more rate hikes will occur this year. Additionally, many were surprised by the Reserve Bank of Australia’s decision to slash its key interest rates by 25 basis points. This week the Bank of England’s upcoming monetary policy decision scheduled for Thursday 11:00 GMT will be the most important event.
Last week’s trading concluded as follows: Dow -0,24%, S & P -0,52%, NASDAQ -0,90%. Major US stock increased only on Monday and Friday, while falling during the other days. On Tuesday, weak data regarding China’s production index and the Bank of Australia’s shocking decision to cut its interest rates contributed to the downturn. On Wednesday and Thursday, stock indexes fell due to disappointing US labor market data along with poor ADP findings. The markets as a whole should be affected by the ongoing quarterly earnings season.
This past week, major European stock indices were in a major downtrend, with the catalyst being negative statistics pertaining to the Eurozone. This included poor manufacturing and service PMI data and disappointing March retail sales data. Additional pressure on the European stock market came from China and a drop in crude oil prices.
Over the past week, gold prices fell gradually, with the only exception being on Friday. This was primarily caused by profit-taking after a long period of growth and expectations heading into Friday’s NFP report. Furthermore, other reports pertaining to the US economy, as well as statements from Fed officials, provided additional pressure on the precious metal. This week, key US statistics, particularly on Friday will affect the trading dynamics.