› MARKET REVIEW AUG 13 - AUG 17

MARKET REVIEW AUG 13 - AUG 17

GBP/USD

The British had been declining all the past week, updating all new and new annual lows. Yes, a “divorce” from the EU puts a very strong pressure on the pound sterling, uncertainty about what will be the exit of Britain from the EU discourages investors, but, the coming week may present several surprises. Very interesting and volatile releases are expected from Great Britain.

And the middle of the week will be interesting, Foggy Albion will report the labor market. On Tuesday, the release of wages, employment and unemployment will be presented. As you know, Britain's labor market is strong enough to surprise, even at such a difficult time for the United Kingdom. On Wednesday, there will be data on British inflation, recalling that earlier the Bank of England raised the interest rate, and rising inflation could accelerate the approach of the next increase. On Thursday, Britain will publish data on retail sales indices and their volumes. It is an extremely important indicator for the economy as a whole, showing the purchasing power of the population. If the population spends more money - the country's GDP is growing, inflation has a chance of acceleration. If, on the contrary, the population prefers to save funds and accumulate, sales fall, the turnover of funds falls, actually, inflation does not come from anywhere.

The National Institute for Economic and Social Research (NIESR) reported last Friday that the British economy is close to the biggest growth since the last quarter of 2016.

"Nip on ahead, there is some evidence that the volume of services in the services sector has stabilized, while the relatively small construction sector continues to gain momentum," said NIESR economist Amit Kara.

It remains to add that the pound sterling has every chance to feel its way this week and it gives hope for an early reversal in pairs not only with a strong US dollar, but also with competitors such as the Japanese yen, for example.

MARKET REVIEW AUG 13 - AUG 17

EUR/USD

The US showed on Friday that America's inflation was still accelerating above forecasts and is 2.4% at the moment. That is clearly a bullish factor for the US dollar, because the higher inflation is, the more rigid it will be for the Federal Reserve to prevent it, raising the interest rate. The chances of an interest rate regulator rising in September have jumped noticeably, after the release of inflation.

This week will also please us with interesting news. From the Eurozone, the most volatile will be Tuesday and Friday. On Tuesday, the Euroblock's GDP will be released, it will be a preliminary estimate and, as a rule, the most volatile one. But since there is not much of anything to accelerate GDP of the EU, it is not expected to change. And in terms of industrial production, there is a decline in the red zone.


On Friday, the EU will publish data on the consumer price index - inflation. The market also does not expect surprises, and inflation has slowed down in monthly terms (according to forecasts). Given the lack of development and dispersal of the Eurozone economy, as ECB President Mario Draghi assured, the near future of the euro is extremely vague.

But the United States, on the contrary, goes well. The labor market is strong, salaries are rising, but we will find out how much the population spends on Wednesday. The retail sales index will be released by the opening of the American session. It is worth noting a significant increase in productivity in the non-agricultural sector in the second quarter (according to forecasts). On Thursday, there will be the release of the number of issued construction permits and a performance index from the Federal Reserve Bank of Philadelphia.

We mentioned the most volatile news of the week. We will consider in much more details in daily analytics, as usual. Summarizing, the US dollar has no reason not to continue strengthening, the European currency has simply nothing to give investors that would attract the due attention.

MARKET REVIEW AUG 13 - AUG 17

OIL

As in the commodity market, the raw materials market is not so simple and unambiguous. The movement of the price of oil can be called a broad consolidation within 75.00-65.00. Generally, the chart is more bullish than the bearish one. However, there is the aggravation of trade frictions between the US and the PRC, which are not going to make concessions.

The administration of the US president, Donald Trump, is trying to press China with tariffs, hoping that China will give up positions and make concessions. After all, Chinese goods are much more imported into the US than American ones to China. So, the strengthening and expansion of tariffs on goods will reduce the demand for gasoline and other fuels, consequently, for oil.

Last Friday, Baker Hughes reported about an increase in the number of drilling rigs in the US by 10 pieces, at the moment there are 869 units in total in the United States .
The International Energy Agency has already adjusted its forecast in the direction of reducing oil consumption in the third and fourth quarters of this year. However, the imposition of US sanctions on Iranian oil could destabilize the market, at least for the first time. Although, on the other hand, large consumers are already diversifying the risks of supply failure, replacing the supplier.

As it was mentioned above, the situation on the market is extremely shaky, but the factors of price reduction at the moment are bigger.


MARKET REVIEW AUG 13 - AUG 17


Gold

As we said earlier, "It's too early for gold to grow." The confirmation of this fact is the reduction of long and medium-term positions on gold as Major Speculators (NON-Commercial), and hedgers (Commercial) for purchase. Net position for sale in aggregate (commerce and non-commerce) became the highest since December 11, 2001 and increased to 684.6 thousand bear contracts.

According to the Commitments of Traders reports provided by the Commodity Futures Trading Commission (CFTC), bearish sentiment is growing. Large speculators almost reduced their positions on price increases and for the first time since 2002 they opened a net position for sale.

The further strengthening of the US dollar, the rise in US inflation more than forecasts last Friday will not support the price of gold as well. The dollar index, which reflects its strength against the basket of major world currencies, updates annual highs again. On Friday, the peak on DXY reached 96.46, and was closed at 96.26.
MARKET REVIEW AUG 13 - AUG 17


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