iFOREX Daily Analysis : February 20 ,2017
iFOREX | Feb 20, 2017 05:25AM ET
The U.S. dollar gained against most other major currencies on Friday, with the exception of the yen, as political turbulence in the U.S. continues to support safe haven demand. Concerns about the upcoming French presidential election and the lack of clarity on President Donald Trump’s fiscal policies are bringing a risk averse mood in the markets.
Data last Wednesday, showed that consumer inflation jumped 0.6% in January, posting the biggest increase in almost four years. In addition, U.S. retail sales also surpassed expectations, increasing 0.4% last month. The upbeat data came a day after Fed president Janet Yellen said in her testimony in front of Congress that the bank is close to achieving its targets and is on course to increasing interest rates in one of its upcoming meetings.
This week, Fed is to publish the minutes of its February meeting on Wednesday, which will be closely watched for clues on the timing of the next rate hike. Investors will also be looking to U.S. housing data in order to see whether the rise in consumer spending and inflation is boosting house prices and a recovery of home sales.
Markets will also be watching survey data on the Eurozone private sector activity, due on Tuesday.
Today, markets in the U.S. are closed due to President’s day holiday, while Canada is to release data on wholesale sales.
EUR/USD
The euro fell by 0.55% against the dollar on Friday, to 1.0614, still holding above the five-week low of 1.0520 that was reached on Wednesday.
Weakness in the euro helped the dollar to recover, after the sharp drop posted on Thursday, as political uncertainty in the U.S., prompted investors to take profits despite better than expected economic data and signs of upcoming interest rate hikes.
In the next week investors will be focusing on the Fed’s last policy meeting minutes for fresh indications on its future monetary policy while a batch of manufacturing PMI data will be released from the Eurozone.
Gold
Gold prices fell on Friday, ending the day at $1234 per ounce after reaching as high as $1243 for the session, with the stronger dollar outweighing concerns about uncertainty surrounding U.S. policy and upcoming elections in Europe. The precious metal still notched up a weekly gain of 0.35% as uncertainty over the policies of U.S. President Donald Trump spurred safe haven demand for gold.
In the coming week, minutes from the Fed’s last meeting will be in focus along with developments regarding the Greek bailout, the French and German elections, and the Brexit.
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WTI Oil
Crude prices have come under pressure in recent sessions, as the latest drilling reports from the U.S. Energy Information Administration (EIA), increased fears that drilling activity from U.S. will offset OPEC and other producers’ efforts to combat the demand and supply imbalance in the industry.
Prices ended higher on Friday, but posted their first weekly decline in five weeks.
Data from oilfield services provider Baker Hughes revealed on Friday that the number of active U.S. rigs drilling for oil rose by six last week.
Inventory data from the U.S. will remain the main focus for investors this week.
US 30
The Dow Jones Industrial Average reached a seventh straight record high on Friday and the S&P 500 and Nasdaq also closed at a record levels as gains in Kraft Heinz helped offset selling in energy stocks.
After suffering losses for most of the session, the Dow and S&P 500 turned positive in the final minutes of the week after Kraft Heinz jumped 10.74 percent after it said it would continue to pursue a $143 billion bid for Unilever (LON:ULVR). Unilever's U.S. listed shares surged 14.00 percent.
Signs of a strengthening economy as well as anticipated tax cuts were behind the most recent optimism. With a strong fourth-quarter earnings season mostly complete, many investors say they need concrete signs of progress from Trump on his policy plans.
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