Analytics › MARKET REVIEW, JUL 23 – JUL 27 , 2018

MARKET REVIEW, JUL 23 – JUL 27 , 2018

EUR/USD

After a failed (according to the US lawmakers and special services) summit in Helsinki with Vladimir Putin, American President Donald Trump switched to the old news "we do not need a strong dollar." Hereby he undermined the strength of the US dollar, which ended the previous week with a fall below the 95.00 level. Also, for the first time within the last few decades, the White House, in the person of its leader, began to comment on the monetary policy of the FRS.

"We are spending a lot of time and energy to strengthen the economy, but rates are rising, I'm not at ease with this," Trump said last Thursday. On Friday, the comment was added with another tweet: "China, the EU, and other countries are manipulating their exchange rates, understating interest rates, and the dollar is becoming stronger because of the increase of interest rate, which deprives us of a competitive advantage."

The focal and most important events of this week will include the ECB meeting, the decision on the interest rate (no changes expected) and the subsequent press conference. And the US GDP for the second quarter is included as well.

We are waiting for comments from the head of the ECB Mario Draghi regarding the current state of the economy and the nearest course of the regulator, according to which the EU is going to move. The Central Bank of Europe will meet on Thursday.

The GDP of the United States will be released on Friday. It is expected to get acceleration from 2.0% to 4.1%, according to the consensus forecast of Bloomberg experts. At the moment everything is very good in the US, but we emphasize the phrase “at the moment.” Let's remind about trade frictions with China: Donald Trump announced a willingness to introduce additional duties for all Chinese exports to the US, and this is for goods slightly more than $ 500 billion. Positive moods on the US dollar are usually pawned in advance, but unexpected "outbursts of negative" or on the contrary, "positive notes" are significantly reflected in dollar pairs.

Therefore, we should take into consideration not only macrostatistics and economic indicators but also the development of the "trade relations" of the US-China.

MARKET REVIEW, JUL 23 – JUL 27 , 2018

AUD/USD

The Australian dollar attracts more attention from investors. Despite the good strengthening of the American namesake, the Australian stopped the decline in the pair, forming a consolidation for a period of almost a month. The reason for this is the improvement in the economy of the Green Continent. Trade frictions between the US and China are also ща beneficial for "Ozzy," since a significant part of Australia's exports falls to China, and the increase in tariffs on goods both Chinese and American (in response from China), provides an excellent opportunity for the Green Continent to increase its exports to China.

Of course, an important factor is a seasonality, since the beginning of summer, the Australian dollar has been supported by agriculture and energy resources. Every year the picture is unchanged for the last few years. This week, on Wednesday, the release of inflation of the Green Continent is expected. The indicator goes for the second quarter, where the acceleration is expected both in annual terms and quarterly, which will definitely support the Australian dollar.

MARKET REVIEW, JUL 23 – JUL 27 , 2018

Gold

Last Friday, gold won back a part of the losses, after the following statements by US President Donald Trump to the "strong dollar", "manipulating the exchange rates of China and the EU," "interest rate rises in the FRS."

Generally, the picture in the asset-shelter has not changed. All attention is devoted to the US dollar. The expected strongest move in the price of gold is the release of US GDP for the second quarter. According to the consensus forecast of Bloomberg experts, the US economy will grow, thanks to an increase in consumer spending.
With the strengthening or decrease of the dollar itself, the commodities traded in it become more expensive, or cheaper, respectively, for holders of competitor currencies to the US dollar. It concerns many products and gold is no exception.

It is worth remembering that the American president himself can make gold. Donald Trump is already well known for his angry and sometimes unexpected tweets, which caused a decline in his currency last Friday. As a consequence, there is the growth in the price of gold.

MARKET REVIEW, JUL 23 – JUL 27 , 2018

OIL

As always, the price of black gold depends entirely on the volume of supplies of raw materials to the market. During the last month and a half the price is very volatile, both a sharp drop and sharp ups. Fears are changing almost every day. There is a reduction in production and sanctions on Iranian oil, then Saudi Arabia reports that it compensates for the supply shortage. And last Thursday the Saudi delegate to OPEC, Adib al-A'ama, said that production would drop by about 100,000 barrels per day in August.

At this time in the US, oil production reached a historic high of 11 million barrels per day. Compared with November last year, production increased by 1 million barrels per day. However, the number of drilling rigs fell by 5 pieces last week. Nevertheless, the total number of drilling rigs in the United States is 94 more than last year.

The key drivers in the price of raw materials remain to be the reports on the stocks of raw materials in the US and the data on the extraction of raw materials in the world's largest exporting countries to the world market.

MARKET REVIEW, JUL 23 – JUL 27 , 2018


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