Weekly Market Review –April 18–22 2016
Watch Out for This Week’s ECB Meeting
Last week the major currencies closed with mixed results. The biggest growth against the U.S. dollar came via the Australian dollar (+ 2.31%), the New Zealand dollar (+ 1.72%), Canadian dollar (+ 1.32%). The British pound displayed moderate growth (+ 0.53%). The Japanese yen (-0.64%), the euro (-1.03%) and Swiss franc (-1.48%) however, all fell against the USD. Weaker than expected U.S. CPI data and a poor industrial production report caused the USD to significantly weaken against the other major currencies. Some speculate that these negative statistics may force the Fed to postpone the next rate hike. Nevertheless, the U.S. labor market is still recovering strongly. This week’s main event will be the highly important ECB meeting. This will of course impact the Eurozone’s interest rates. Some leading analysts believe that the European Central Bank could in fact indicate that further easing measures may be on the horizon. If that occurs the euro will potentially face a steep drop off.
It was a solid week for most major U.S. stock markets as quarterly earnings season commenced. Additionally, positive economic data from China reassured market participants that Chinese economy is starting to recover. Furthermore, strong support for the stock market came on the back of weak economic statistics from the US. Understandably it convinced many investors that the Fed will not rush along the next interest rate hike. This upcoming “cheap money” period should provide additional support for the securities market. However, the failed Doha summit meeting will hurt the markets as the week begins.
Economic data from China helped propped up the markets and provided some hope that China’s economy started to recover. Additionally, continued support for the European stock markets enabled the Bank of England’s to leave the nation’s interest rates unchanged. This week investors should pay attention to the oil market and to the ECB meeting, which is scheduled for April 21 at 12:30 GMT.
Crude Oil Futures, Daily
Last week, oil prices rose by five percent, once again returning to $42 a barrel. Despite the growth of U.S. oil stocks, oil continued to rise in price. This trend occurred thanks to a fall in U.S. oil production, and the anticipation of the Doha meeting. Continued support for the oil market has weakened the USD. However, oil prices dipped to start the week as no agreement to curtail oil production was reached in Doha. What can be concluded from the meeting is that countries require some more time to understand the situation in the global oil market. On the other hand, most of the participants hope that the supply and demand will be more balanced with the help of broader market forces.