Weekly Market Review — December 14 – 18, 2015
Main Events of the Week – FOMC Meeting and Interest Rate Decision
Most of the major currencies closed last week in the green. The strongest growth against the US dollar was the Japanese yen (+1.79%), the Swiss franc (+1.31%), the Euro (+1.01%) and the British pound (+0.75%). On the other hand, commodity currencies fell: the New Zealand dollar (–0.51%), the Australian dollar (–2.00%) and Canadian dollar (–2.87%). Major currencies were adjusting against the US dollar in anticipation of the Fed’s meeting on December 15th – 16th. Commodity currencies demonstrate the negative dynamics against the background of general decline in commodity prices. The coming week will be the last week of the outgoing year, during which a large number of macroeconomic indicators will be issued. Important data on Industrial Production in the Eurozone will be published on Monday at 10:00 (GMT). Inflation reports in the UK and the USA will be released on Tuesday at 09:30 (GMT) and 13:00 (GMT), respectively. On Wednesday, the focus will be on the UK labor market, the results of the Fed meeting and data on the GDP of New Zealand, which will be published at 09:30 (GMT), 19:00 (GMT) and 21:45 (GMT). Retail Sales in the UK will be the main event on Thursday. Finally, on Friday Canada will present its inflation report at 13:30 (GMT).
Major US stock markets have demonstrated negative dynamics this week. This was caused by the fall in prices for “black gold” against the background of the reluctance of OPEC to introduce new production quotas. Chinese trade balance data also felt pressure, since it was worse than analysts’ expectations. Meanwhile, stock market slump ended on Thursday, against a background of positive statistics on the US labor market. However, investors are cautious ahead of the Fed meeting, which will take place on December 15th – 16th. According to most observers, the US regulator will raise rates for the first time since 2006. In turn, the move will put pressure on the stock markets.
Major European stock exchanges were trading in a downward trend last week. This was caused by negative statistics from China as well as the frustration produced by the ECB’s decision on the QE program. Despite statements from the representatives of the ECB after the meeting, they were unable to convince investors in the early expansion of the program, which was expected by most investors. Meanwhile, market participants are closing their positions due to expectations from the US Federal Reserve meeting, scheduled for December 15th – 16th.
Light Sweet Crude Oil Futures
“Black Gold” quotes continue to be under pressure, beating yearly lows almost every day. This is caused, primarily, by the reluctance of the OPEC countries to introduce quotas for oil production. Protection of their market share has a negative impact on the world market. Despite a slight decline in Crude Oil Stocks in the US, oil continues to fall amid reports from the International Energy Agency, who said that oil demand will be weak next year and it will not lead to a more balanced global market. The pressure also comes from a general fall in commodity prices.