After last week, we can confidently say that Christmas and New Year break is over and everything came back to normal and trading on the financial markets is in full swing. Consequently occurred a number of very interesting opportunities to earn or lose money.
On Tuesday we had results of November report of the US Bureau of Labor Statistics surveys about Jolts, which examine the number of open jobs, jobs, layoffs and changes in net overall health of the market. According to the report, in opening jobs there have not been major changes – 5,522mln, the forecast of 5,500 million and the result from the previous month 5,451 million (after a downward revision) is only a cosmetic difference. Full text of the report is the link.
Few hours later we also met weekly information from API about inventories of oil. API points to the growth of US reserves of black gold in the last week to equal 1.5 million barrels. Earlier market forecasts centered around the healthy growth of just 900,000 barrels. after last week’s decline of more than 7.43 million barrels.
On Wednesday event of the day and what we might call event of the week was the afternoon conference of president -elect Donald Trump. As I wrote in Wednesday’s review of the markets :
From today’s conference and speech of the new president-elect everybody expected concrete information how will look the timetable for tax reforms and changes in law for enterprises. Instead, Donald Trump thanked only automotive corporations for continuing investments in the United States and criticized pharmaceutical companies for high prices of pharmaceuticals, which directly hit the biotechnology sector.
So… context of the whole occurrence is not optimistic. On the markets evident is disappointment of the attitude of the new president-elect, who instead focusing on topics related to the development of the American economy mainly raised subjects related to issues of relations with Russia. As a result of today’s conference dollar lost against major currencies.
On Thursday afternoon we met several macroeconomic publications, which included: price index of export / import, declared initial unemployed and applications for unemployment benefits:
Investors’ attention was focused primarily on more favorable outcome than expected of jobless Claims, declared number of initial unemployment was 247,000, compared to forecasts of 255,000. Definitely better presented export price index m/o/m in December.
In the night from Thursday to Friday was held conference of Janet Yellen -during her speech she did not mention monetary policy. During the question and answer session it changed. We learned, among other things, that:
- The Federal Reserve is now focusing on maintaining low unemployment rate
- Another goal is to low and stable inflation around 2%
- This should be achieved later this year
- After reaching the above-mentioned the Fed will engage its forces in improving the state of the labor market and a further rise in inflation
News from our national economy …
On Wednesday, the Monetary Policy Council decided to leave the interest rates unchanged at 1.50%. During the press conference the NBP President, Adam Glapiński stated that he doesn’t see opportunities to increase rates within 2017r.
On Friday, we met a packet of data on consumer inflation CPI and the current account balance and the money supply.
One of the most important decisions for our national lookout proved Moody’s and Fitch to maintain the Polish credit note and assess of the overall economic situation which were unchanged.
Let’s get to the charts …
AUDUSD
Contrary to many predictions and analyzes suggesting continuation of the ongoing declines from November, the market overcame this week an important resistance level around 0.7330 about which I wrote last week, and as a result of Thursday’s speech of Donald Trump reached next significant level at 0.7525 around which market oscillates currently
Rejection of this level could trigger at least a bearish correction with potential target in area 38.2% Fibonacci correction of the ongoing from three weeks increases.
What influenced Australian dollar were mainly published on Tuesday retail sales data, which, despite forecasts of 0.4% in November grew by just 0.2% from 0.5% in the previous month
EURUSD
Since beginning of the week the market was moving north. As a result of the emergence of supply response, on Tuesday we rejected last week’s highs and until Wednesday observed a decline that reached level around 1.0485. Due to the disappointing Wednesday speech of the president-elect, this level was rejected and the market has come down to around the level of 1.0685, where from Thursday we observe consolidation.
The strengthening of European currencies was also supported by growth of industrial production in the euro area, which despite still better forecasts at 0.5% compared to the previous reading -0.1% (adjusted 0.1%) in November rose to 1.5%
On Thursday we met Protocols (minutes) from the December meeting of the European Central Bank. As we read in the document, according to members of the ECB at the end of last year we saw clear signs of growth in consumer inflation. Among the most important headlines of published minutes we read:
- Several members of the ECB was not convinced as to support the current form of QE program
- Part of the board of the ECB’s preferred extension of QE by 6 months at the level of buying EUR 80 billion
- Praet and Coeur argued for an extension of nine months at the height of buying 60 billion
- Political and economic uncertainty continue at high levels
- Inflation forecasts look better – among other things due to higher oil prices
GBPUSD
The pair is in an area of extremely important support level, where on Tuesday and Wednesday was a bullish reaction. It is worth noting that apart from the October flash crash the market below this level was in February 1985. It seems that in near future there is a high probability of increases even though we need to keep in mind that investing in long positions is speculation against the main trend which is obviously bearish.
Last week we learned data on industrial production in the UK, which rose more than expected. Despite the fact that better forecasts at 0.5% compared to the previous reading -0.9 (adjusted to -1.0%), industrial production rose in November to 1.3%. At the same time, we also met readings of trade balance, which is not proven to be equally optimistic
USDCAD
As a result of Wednesday’s Donald Trump conference market broke out from ongoing from last week consolidation.
Extremely interesting is current situation on daily chart where the market overcame line of bullish trend lasting from May 2016 . We are now in area of local support which defeated could pave way for further declines.We should, however, consider Thursday’s bullish reaction and formed in result a bullish candle pin-bar, which could fortell in near future possibility of at least a bullish correction.
On Tuesday we met report on number of housing starts in Canada. Despite optimistic forecasts 195,0K compared to the previous reading 184,0K (adjusted to 187,3K), in December, the number increased to 207 thousand.
Much less optimistic proved to be information on building permits, which, although worse forecasts of 2.4% compared to the previous reading of 8.7% (adjusted to 10.5%) in November amounted to -0.1%.
On Wednesday, we also met weekly report on US inventories of crude oil according to EIA. After a strong decline last week in excess of 7 million barrels, analysts had expected a stronger rebound in the vicinity of 1,162mln. The final result, however, surprised the biggest optimists and inventories increased by more than 4 million.
Slightly worse was also published on Thursday, the price index of new properties, which despite a forecast of 0.3% (previously 0.4%) in November was only 0.2%.
New lows set this week Turkish lira, which despite it is only half of January, compared to the US dollar has already lost nearly 11% this year. For comparison, in whole 2016 increases on this pair reached 20.91%.
What awaits us this week ?
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