Weekly Market Review — February 15 – 19 2016
Inflation reports for the UK, China, USA and Canada Will Be in the Focus this week
At the end of the week all the major currencies showed an increase. The biggest growth against the US dollar showed the Japanese yen (+ 3.06%). A smaller increase showed Swiss franc (+ 1.47%), euro (+ 0.93%), the Australian dollar (+ 0.60%) and Canadian dollar (+ 0.42%). The pound closed week with almost zero change (+ 0.09%) the same as New Zealand dollar (+ 0.05%). The fall of the US currency on a wide range of market was due to the publication of negative statistics, and to the speech of the Fed’s Janet Yellen. During two-day report Yellen noted that the conditions for a further increase rates tightened, but such step is possible. Also, she noted that the Fed is keeping on top of the latest economic data, and further steps will depend on this data. Thus, the market was convinced that the meeting in March, the Fed will not raise the cost of borrowing. Next week is scheduled to publish a lot of economic data. So, on Monday, data on the trade balance and the volume of loans issued in China in the 02:00 (GMT) will be published. Also, on this day there will be ECB President Mario Draghi’ speech, scheduled for 14:00 (GMT). On Tuesday, there will be a report on inflation in UK 09:30 (GMT). On Wednesday, 09:30 (GMT) will be report on U.K. unemployment rate, US will present data on industrial production at 14:15 (GMT). February 18 there will be data on the labor market in Australia 00:30 (GMT), and 01:30 (GMT) China will report on consumer prices. On Friday at 13:30 (GMT) will be published two reports on inflation – the US and Canada.
During the trading week, the US stock markets showed a generally negative trend. The only day when the market closed in the green, was a Friday. The main reason of pressure on stocks was the decline of quotations of “black gold”. Also, the speech of the Fed’s Janet Yellen was important, she pointed to the external risks to the US economy. Meanwhile, on Friday data on retail sales provided some support to the market, this data raised hopes for the restoration of economic growth after a recession that was observed at the end of last year. At the end of the trading week: Dow -1,56%, S & P -1,07%, NASDAQ -0,61%
European stock markets also showed a negative trend, because investors tried to avoid the risks of a global economic slowdown. Also, the pressure on the stock market has provided disappointing corporate reports. In addition, the economic statistics for the region’s economy, which was published this week were negative. Meanwhile, on Friday, European stock markets rose slightly, which was due to the publication of statistics on the GDP of Germany and the eurozone as a whole. Thus, according to published data, the GDP for the fourth quarter of last year in the preliminary assessment has fully matched the expectations of experts. This week the dynamics of stock markets will depend on the general mood of investors, as well as on the dynamics of oil prices.
The precious metal last week rose by almost $100 per ounce. Investors traditionally used gold as a save asset. The falling of oil prices made investors to avoid the risky assets, which boosted demand for safer assets. Also, some support for gold prices provided celebration of Chinese New Year. At the same time, the greatest support for the gold provided the transfer market expectations about further tightening of monetary policy by the US Federal Reserve. Investors predict that the US regulator to raise rates until the meeting in June. It will give some support to gold in the medium term.