› Market review, Apr 30 – May 04, 2018

Market review, Apr 30 – May 04, 2018

EUR / USD

After the "dowish" performance of Mario Draghi, the week ended with a correction by the European below the key level of 1,210 and this week starts just above 1,212.

The week starts with the retail sales and inflation in Germany, Italy's inflation and meeting of the EU finance ministers. The basic price index of personal consumption, the index of business activity, the pending home sales in March will end the business day.

On Tuesday, there is a Labor Day holiday off in the euro area and the CIS countries.

On Wednesday Spanish Manufacturing PMI is expected, also, Italy, France, Germany and the EU as a whole will publish PMI report for April. It is worth paying attention to the GDP in the euro area and the unemployment rate in March. US will publish ADP in April. A bit later, data on crude oil inventories. And at 18:00 GMT there will be a Fed meeting, where interest rate will be decided. The investors are waiting for a hint that there will be more interest rate raises, than is expected at the moment.

Thursday is very important for the Eurozone. Besides unemployment in Spain, inflation in the EU. After all, as we could see, the economic indicators are slowing down and the ECB is very worried about it. And if inflation slows down, then the the QE program will not end in September of this year, and can last at least until the end of the year.

On Friday the index of business activity in the services sector in Spain, Italy, France, Germany and the EU. The volume of retail sales. The first Friday of the month is the change in the number of people employed in the non-agricultural sector (NFP). Average hourly earnings, the proportion of economically active population, the unemployment rate and at the end of the trading week - the number of drilling rigs from Baker Hughes.

Market review,  Apr 30 – May 04, 2018

OIL

Though the number of drilling rigs in the US has increased to the level of 2015, and last Friday five more installations totaled 825 operating units, black gold has been persistently prevented from falling until the Monday morning. Daily oil production in the US has reached 10.59 million barrels per day. At this rate, the US will be able to catch up with Russia by the end of the year, which extracts about 11 million barrels per day.

In June, at the OPEC meeting, the participating countries will decide, whether to prolong production cuts, because the global reserves of black gold almost fell to the target level set by OPEC.

But the main driver today and the next two weeks is, of course, Washington. The question is if the US sanctions are going to affect Iran. The resumption of sanctions will lead to a decrease in production in this Middle East country and, as a consequence, a reduction in global oil reserves.
Major news as usual pm Tuesday-Wednesday, weekly stocks of crude oil in the US and on Friday the number of drilling rigs from Baker Hughes. But the focus is of course on geopolitics tension.

Market review,  Apr 30 – May 04, 2018

GBP / USD

The British currency, after the two-week bear rally found support at 1.375. The level was already touched in March and February. The next five-day period will be crucial for the sterling.

All week, UK will report the index of business activity. On Tuesday - in the manufacturing sector, on Wednesday - in the construction sector, on Thursday - in the services sector. Thursday is the most important for the GBP, since the main revenue and, accordingly, the benchmark for the investor is the services sector. In which, according to forecasts, improvement is expected from 51.7 to 53.3. The production and construction indices will add more support.

The British currency has a chance at least to suspend strong bearish sentiments with the transition to consolidation, but the American news are also strong, although the economy is slowed a bit, but salaries increased. The Fed meeting will also have an impact on the pair, if there is not a hint of another 3 rate hikes this year, there may be US dollar’s sell-off.

Market review,  Apr 30 – May 04, 2018


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