Financial Market Review for January 15 2018 In the currency market today, the Aussie Dollar was up 0.47% to $0.7960, with the Kiwi Dollar up 0.48% to $0.7277. The Yen was also on the move, rallying 0.38% to ¥110.64 against the Dollar. For the Yen, the gains are policy driven, with the markets now beginning to consider a near-term move by the BoJ. The Yen’s rally came in spite of the equity markets making strong gains through the early part of the day. Market sentiment towards the global economy remains robust at the start of the year and, following the U.S equity gains to new record highs on Friday, there was nothing to get in the way of a Monday rally. Economic data out of the Eurozone this morning is on the lighter side, limited to the Eurozone’s November trade balance. Following last week’s 1.44% rally, the EUR gave up $1.22 levels early in the Asian session this morning before rebounding strongly ahead of the Eurozone’s trade figures due out later this morning. Following Germany’s trade data, the Eurozone’s trade surplus is forecasted to widen from €18.9bn to €22.4bn in November, supporting the market’s sentiment towards the Eurozone economy and global demand for European goods. Outside of the stats, news has been hitting the wires in the early part of the day of possible resistance to the terms of the grand coalition, with certain demands from the SPD reportedly missing from the current version of the agreement. Any negative news could weigh on the EUR, though the markets will likely wait until more concrete details emerge. At the time of writing, the EUR was up 0.22% to $1.2224, with politics and trade data the key drivers through the session. For the Pound, there are no material stats scheduled for release, which leave Sterling exposed to Brexit chatter at the start of the week. Friday’s 1.4% rally came off the back of hopes that Britain will see a soft Brexit and maintain close relationships with the EU, whilst a softer Dollar will have certainly contributed to the Pound’s gain. While Dollar woes are unlikely to disappear anytime soon, any Brexit chatter through the day will be of influence, particularly if the chatter is in contradiction to last week’s soft Brexit noise. The Pound could fall back to low $1.36 levels, with a Dollar rebound also a possibility when considering how far the Dollar has fallen at the start of the year. The Pound was up 0.13% to $1.3746 at the time of writing, with Brexit in focus. Across the Pond, with the U.S markets closed for Martin Luther King Day, there are no stats to consider, with trading volumes expected to be on the lighter side this afternoon. Following last week’s inflation figures, which were not as bad as the moves in the Dollar had suggested, upside through the day is likely to be limited, though the Dollar bashing will have to come to an end soon, with the markets likely to begin considering the Dollar as oversold.
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Financial Market Review for January 15 2018 At the time of writing, the Dollar Spot Index was down 0.04% to 90.935, recovering from an intraday low 90.825, with very little to provide the Dollar with direction through the day. In the Equity markets, Asian shares hit historic highs on Monday after Wall Street extended its recordbreaking run. Stocks in Hong Kong jumped 0.9 percent to another record. Investors were optimistic that Chinese gross domestic product data for the December quarter due on Thursday would show growth of at least 6.7 percent for the world’s second biggest economy. Wall Street was on a roll as the fourth-quarter earnings season kicked off with solid results from banks and robust retail sales, driving investor optimism about economic growth. The Dow amassed gains of 2 percent last week, while the NASDAQ gained 1.8 percent and the S&P 500 1.6 percent. The S&P 500 and NASDAQ scored eight record closing highs out of the first nine trading days of 2018, while the Dow boasted its sixth closing high of the year. Earnings for S&P 500 companies are expected to increase on average by 12.1 percent in the quarter, with profit for financial services companies likely to increase 13.2 percent. Finally in the commodity market, Gold prices continue to rocket higher defying gravity and fundamentals as the dollar takes a hiding all across the board. There has not been much attention being paid to the gold markets as all the focus is on the euro and the dollar and this lack of focus has been utilized well by the gold bulls in pushing the prices higher since the middle of last month. While the rise from last month could be dismissed as a coincidence as the dollar got weaker under low volume. Brent crude oil prices rose to $70 a barrel on Monday, supported by ongoing output cuts led by OPEC and Russia, and ignoring a rise in U.S. and Canadian drilling activity that points to higher future output in North America. Brent crude futures LCOc1, the international benchmark for oil prices, were at $70 per barrel at 0558 GMT, up 13 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $64.53 a barrel, up 23 cents. Both benchmarks last week reached levels not seen since December 2014, with Brent touching $70.05 a barrel and WTI reaching as high as $64.77. Oil markets have been well supported by production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia which are aimed at propping up crude prices. The cuts started in January last year and are set to last through 2018, and they have coincided with healthy demand growth, pushing up crude prices by more than 13 percent since early December. View our full economic calendar for a daily roundup of major economic events.
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