Weekly Market Report – 19.02.2018
CurrenciesEUR/USD – hit the lowest level since January 2003, a 14 year low. This came after very strong data out of the US which showed that the ISM Manufacturing PMI was better than expected. The data out of the Eurozone was also better than expected, and especially the inflation data out of Germany was looking good, but this was overshadowed by a much stronger USD. Today we get inflation data for the Eurozone as a whole as well as the FOMC Meeting Minutes of last month when they decided to increase the interest rate.
USD/JPY – was already climbing before the US data, but after this we got another lift towards the resistance, which was still able to hold. After that we saw a strong correction, and this morning we are moving up again, possibly to test how firm the resistance around the 118.6 level is.
GBP/USD – even though the data out of the UK was better than expected, it was unable to withstand the renewed onslaught of the USD and it reached the lowest level since the end of October. Today we will have more data out of the UK.
USD/MXN – soared again due to two main reasons. The first one is the fact that the USD strengthened after the strong data out of the US. The second is that shortly thereafter Ford announced that it is scrapping plans for a $1.6 billion plant in Mexico and instead will invest part of the money in a plant in the US. It is evident that, while not even having taken office yet, Trump is already influencing decisions.
USD/TRY – reached a new record high yesterday and remains trading close to that level. The strength of the USD is only part of the story here, as Turkey is suffering from terrorist attacks as witnessed on New Year’s Eve, and its state of emergency, in place since the failed coup, has been extended as well.
Bitcoin – keeps on moving up and has broken above the 1000 mark. It is now within striking distance of marking a new record high. More and more people want to jump on the bandwagon, which could lead to Bitcoin jumping further up, but since a lot of the move is speculative, the question is if and when the light starts to go out and who will be the one to turn it off.
IndicesDollar Index – reached the highest level since December 2002 due to the strong data out of the US, which buoyed the USD even further.
S&P 500 – was trading up, but started to see some downside when the USD peaked and also oil started to move down significantly. However, the S&P managed to climb up near the end of the day and is extending the gains this morning.
CommoditiesGold – even though the USD strengthened significantly, we saw gold move higher to reach the resistance around the 1163 level once again. However, we can see that the level is still holding and the question is if with the strong USD, there will be enough power to break through the resistance.
Heating Oil – dropped sharply due to a forecast of warmer weather than usual in the US, which reduces the demand for heating oil.
Natural Gas – also fell sharply yesterday as the strong USD dragged down commodities, but mainly due to the fact that weather in the US is expected to be warmer than expected, which in turn reduces the demand for natural gas as it is used for heating as well.
Oil – saw a real roller-coaster ride yesterday. It started the day higher on hopes that OPEC and non-OPEC countries will actually follow through on the agreement and reached the highest level since July 2015. However, the same factors that caused natural gas to drop are also part of the reasons oil dropped, but there are also other factors at play here, and that is that the Genscape data showed a very large build at the hub in Cushing, Oklahoma, which is the main storage facility in the US. In addition, Libya is increasing its production of oil, as it is exempt from cutting supplies, as are Iran and Nigeria.
StocksGM – with Ford announcing it canceled plans to move a plant to Mexico, President-Elect Trump took his aim on GM for starting a plant in Mexico instead of investing in the US. This resulted in some immediate downside in GM shares, although it was still able to close a bit higher.
Tesla – reported disappointing delivery data which were even less than their own forecast. Even though the absolute number is not that far off, percentage wise it means that it delivered over 10% less for the quarter and for the whole year around 5% less. This was obviously not good news for the company and shares were down in afterhours trading.