Weekly Market Review – 08/06/2015
last week’s main happening was the NFP release by the US Department of Labor. The forecast for new jobs in non-agricultural sector was + 225K, but the actual value significantly exceeded expectations, showing an increase of 280K. The hourly wages index was also better than expected – an increase of 0.3% vs. + 0.2% forecast. Strong labor market data have put tangible pressure on the stock market, so they will play a significant role at the June meeting of the Federal Open Market Committee (FOMC), and increase the chances of raising interest rates in September.
This week’s main economic events: Retail sales Thursday and Producer Price Index (PPI) Friday.
On the weekly chart a double divergence (orange line on the graph) formed, which is a very strong bearish signal in the long term.
European stock indices are under pressure due to the situation in Greece. The Greek government received a reprieve from creditors until June 30th, on that date they’ll be required to replay 1.6 billion euros.
After the publication of very strong U.S NFP data the dollar rose against all major world currencies
EUR / USD fell 170 points, the pound sterling – 130 pips, the Japanese yen lost more than 100 points. Mario Draghi’s speech earlier in the week substantially supported the Euro-currency. He said that the ECB’s monetary policy is correct, and provides the expected results. The Russian ruble was under pressure all week for several reasons: low oil prices, the failure of OPEC to reduce oil production quotas, currency purchases by the Central Bank of Russia and the likely extension of sanctions.
This week’s main events: RBA Gov Stevens Speaks – June 10, BOE Gov Carney Speaks – June 10, BOC Gov Poloz Speaks – June 11.
Gold has fallen in price this week by almost 20 US dollars. The rise in demand for the metal is a possible reaction to negotiation failure by Greece with its creditors, in the medium term a sideways trend appears likely to continue.
The oil market’s main event of the week was the OPEC summit. The cartel decided to keep production quotas unchanged at 30 million barrels per day. Iran also expressed willingness to sharply increase oil exports after the lifting of sanctions.
An additional fall in prices appears to still be in the cards for the long term, and there are no significant events expected this week.