Monday, 23 May 2016 16:33 Written by

US dollar strengthened significantly last week : 23.05.2016 by IFC Markets

US stocks edged up on Friday on strong sales outlook for Applied Materials. Its stocks soared almost 14%. Moreover, the positive existing home sales data came out in US. The US dollar index which has been advancing for almost the whole week was flat on Friday amid stronger yen on notably higher positive trade balance of Japan. Today at 15:45 СЕSТ the Markit Manufacturing PMI for May came out weaker than expected.

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European stock market indices are looking south today on weak corporate data. Fiat Chrysler stocks fell 3.7% on the news the automaker may lose the right to release its automobiles in Germany in case they do not correspond with the national ecological standards. The German Bayer lost 3.2% on the news it was planning to acquire the US seeds producer Monsanto for $62bn. Deutsche Bank said it sees no potential for further European market growth till the end of the year. The main reason for such pessimism is the looming Fed interest rate hike and Chinese economic slowdown. Today in the morning the set of positive PMIs came out in Germany while they fell in Eurozone. If the weak data come out in Germany they may push the European indices lower. Today at 16:00 СЕSТ the preliminary May consumer confidence index came out better than expected in Eurozone.

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Nikkei edged lower today as Japan’s Minister of finance Taro Aso said the scheduled for next April sales tax increase will happen after all. Stronger yen was another factor which pushed the Japanese stocks lower in the wake of positive Japanese external trade data for April. Dearer national currency makes the exporters less competitive. The positive trade balance was 823.5bn yen in April ($7.5bn.) which is far above the expected surplus of 492.8bn yen. The balance is positive for the 2rd straight month. The next significant data – inflation for April – is to come out in Japan on Friday.

Oil prices edged slightly lower on Monday. Iran said it was not planning to limit oil production and exports. Now it supplies 2mln barrels of oil a day to the global markets but they are to reach 2.2mln a day till mid-summer. The steadied number of active oil rigs in US is another factor which supports oil. Their number fell this year by 218 units to the current 318 units which is the lowest since October 2009. Some investors believe the oil rigs number has reached its low. Meanwhile, the Goldman Sachs investment bank forecasts the oil prices to be volatile between $50-60 a barrel till 2020. Morgan Stanley banks pointed that exploration drilling and new fields discovery fell to the lowest since 1952. Last year new fields with only 2.8bn oil stocks were discovered outside the US which is enough to meet only one month of global demand for oil. The banking news slightly supported the oil prices.

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Beef prices edged lower on Friday on USDA report which showed the cattle placements in feedlots rose in April 7.5% compared to the same period of last year. Meanwhile, the beef prices fell only 2% since the start of the year. In theory, such a divergence may push the cattle prices even lower. Nevertheless, the net longs rose on Chicago Mercantile Exchange by 88% last week.



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