Analytics › MARKET REVIEW, MAY 28 – Jun 01, 2018

MARKET REVIEW, MAY 28 – Jun 01, 2018

OIL

Due to the significant reduction in oil output in Venezuela and a possible decrease in the export of this raw material from Iran related to the resumption of US sanctions, the result of the June OPEC meeting is to influence the price quite strongly.

Last week, taking into account the current situation of a decline in supply in the market and an increase in the price of black gold, Russian Federation and Saudi Arabia announced a desire to restore part of the production (around 1 million barrels per day).

After such statement and an increase in the number of drilling rigs in the United States by 15 units over the past week, the price immediately "dived" below the psychological mark of $70.00.
In addition to the reports on crude oil inventories and the number of drilling rigs, this week the question will be "are other OPEC allies going to agree to production increase?". But, after all, Russia and Saudi Arabia can increase this volume themselves, without the participation of allies.

But the Saudis still prefer a more diplomatic solution, since the success of the union of 24 countries, is important to the Middle East country.

On the other hand, Iran has announced that it is not planning to reduce oil production, despite many assumed that Iran is on its way to freeze part of the production because of the resumption of US sanctions.

The OPEC meeting will be held this Saturday in Vienna.

MARKET REVIEW, MAY 28 – Jun 01, 2018


EUR / CAD

As in February of this year Canadian dollar in a pair with the euro renewed eight-year high. Strong pressure on the single European currency is going to help loonie to continue the downward two-month trend, completing the current correction.

On Wednesday the CBA of Canada will announce its decision on the interest rate, but as no changes are expected, it is important to pay attention to the regulator’s statement.

On Thursday Canada will report on the country's GDP for the first quarter and in March, as well as it is going to release yearly GDP changes. Later in the evening, board member of the Bank of Canada Sylvain Leduc will speak.

Though a slight slowdown of GDP is expected, but data from May 1 showed that everything is not so bad. Acceleration above forecasts by 0.1% gave forces to the bears in the pair. Obviously, that the head of the Bank of Canada Stephen Poloz made a good choice betting on the labor market. Similar scenario can be expected this week.

MARKET REVIEW, MAY 28 – Jun 01, 2018

Gold

As always Gold reacts to the global risks. Last week when US president signed a letter to the DPRK leader, gold jumped to a psychologically important level of $1300.00. But Kim Jong-un's response did not allow the asset to grow further. Moreover, this weekend it became clear that the summit would still take place and an American delegation arrived in North Korea to prepare for the negotiations, that are scheduled to be held on June 12.

At the moment, the fears of trade tensions in the world, mostly US - Iranian sanctions are in the spotlight, contributing to the price. Germany and France have already met with Vladimir Putin and discussed the sanctions and their consequences for all Middle East partners.

It is difficult to predict the further price movement due to the unpredictability of the American president. He makes a sharp attack (as a refusal to meet with the leader of the DPRK), as prices surge, after that he makes adjustments. And the stress subsides.

Therefore, keep an eye on geopolitics, any event can give a good entry point. Too often there is the same scenario. At first Trump fuels passions, then goes backs away.

MARKET REVIEW, MAY 28 – Jun 01, 2018


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