Weekly Market Review – May 16–20 2016
CPI’s from the UK, US & Canada will highlight the week.
All the major currencies declined last week, with most coming against the US dollar, including the Japanese yen (-1.41%), Australian dollar (-1.23%), New Zealand dollar (-0.84%), Euro (-0.74%), Pound (-0.38%), Swiss franc (-0.25%) and the Canadian dollar (-0.22%). As opposed to all of the others, the USD grew for the majority of last week due primarily to comments from Fed officials pertaining to the US economy. Despite weak data relating to US labor market, majority of the reports published last week indicated that the US economy is growing. This week’s main events will include the UK and the US consumer price indexes (CPI) on Tuesday at 08:30 and 12:30 GMT respectively. The Canadian CPI will be occur on Friday at 12:30 GMT.
On Monday and Tuesday last week, the major US stock indexes showed modest growth, following dynamics pertaining to the oil market. This is in contrast to the second half of the week, where stock markets fell moderately as the oil market failed to impress. Additionally, weaker than expected reports on stocks including Disney and Apple hurt the market. Finally, statements from the Fed pertaining to rate hikes put further pressure on the stock market.
Major stock indexes across Europe dropped last week despite better than expected German industrial orders on Monday. Additionally, the Bank of England’s decision to leave the rates unchanged provided further support.
Last Monday gold prices lost about 2% as demand for the USD increased due to profit-taking following a disappointing NFP report. Prices during the rest of the week proved to be quite volatile. On the one hand a statement from the Fed along with positive US economic data put pressure on the precious metal. On the other hand, the low probability of a rate hike in June’s upcoming meeting, provided support. This week, various US statistics should determine where prices are heading.