Weekly Market Review – June 6 − 10 2016
Australia and New Zealand will announce their interest rates this week
At the end of the week most of the major currencies were above the zero mark. The largest growth against US dollar came via the New Zealand dollar (+ 3.91%), Japanese yen (+ 3.43%), Australian dollar (+ 2.53%), Euro (+ 2.27%), Swiss franc (+ 1.92%) and Canadian dollar (+ 0.72%). The British pound however, fell against the USD (-0.69%).
The US dollar price adjustment was observed during the entirety of last week as market participants cautiously awaited the most important report − NFP. However, up until that point, data on personal income and spending, as well as the price index for personal consumption expenditures provided some support for the US currency. Once the devastating NFP report hit the USD fell significantly. Although average wage growth fully met experts’ expectations and unemployment rate unexpectedly fell to 4.7%, it was not enough to mask the terrible NFP report. The number of new jobs created was only 38K as opposed to the predicted 164K, sharply reducing the likelihood of a June rate hike. This week Australia and New Zealand will announce their interest rate decisions on Tuesday 4:30 GMT and Wednesday 21:00 GMT respectively.
Trading last week kicked off a day later due to Memorial Day on Monday. On Tuesday major US stock indexes rose after positive data on US personal income and spending. However, the greatest volatility came on Thursday and Friday thanks to the OPEC conference and the poor NFP report. At the moment, US stocks are at maximum values thanks to loose monetary policy. From a technical point of view, it is likely that this is the beginning of a downward movement in the near future.
At the end of the trading week: Dow -0,37%, S & P + 0,00%, NASDAQ + 0,18%.
Last week major European stock indexes trended negatively as weaker than expected reports exposed the region’s economy. The most impactful statistic came on Thursday, with the European Central Bank upheld the parameters of monetary policy, pointing out the need to continue the measures taken in March. Additionally, Friday’s NFP report provided additional pressure.
At the end of the week the precious metal rose by over $40, primarily because of the NFP report. This promptly rectified the previous week’s decline. This poor NFP report significantly reduces the likelihood of a rate hike at the next meeting. This should benefit gold prices in the long-term. Global events also played a part in propping up the precious metal. With regards to this week, investors will be focused on upcoming US statistics that should play a part in determining when the next rate hike may occur.