iFOREX Daily Analysis : June 16,2017
iFOREX | Jun 16, 2017 05:11AM ET
The dollar remained close to two-week highs against most major currencies on Thursday, supported by three upbeat economic reports lifting sentiment on the prospect of stronger U.S. economic growth.
The U.S. Department of Labor reported Thursday that initial jobless claims decreased by 5,000 to 237,000 in the week ended June 4, beating forecasts of a 3,000 decline.
On the manufacturing front, investors welcomed a pair of strong economic reports on manufacturing activity in the states of New York and Philadelphia.
The Philly Fed said its index for current manufacturing activity in the region decreased to 27.6 in June from 38.8 in May. Analysts had expected a reading of 24. Whereas, in New York, the Empire State manufacturing index climbed to 19.8, after falling to minus-1 in May.
The upbeat economic reports lifted expectations of an additional rate hike this year, after the Federal Reserve on Wednesday maintained its outlook of a total of three rates for 2017.
For today, the euro zone is to release revised inflation data and the U.S. will close the week with data on building permits, housing starts and consumer sentiment.
GBP/USD
A day after the Federal Reserve increased interests rate for the second time this year, signalling confidence in the U.S. economy, initial jobless claims and manufacturing data exceeded forecasts helping the dollar gain against other currencies.
Sterling was one of the few currencies that overshadowed of a surge in the dollar, with GBP/USD up as the Bank of England kept rates unchanged but stoked expectations of a future rate hike, revealing that an increasing number of its members favoured higher rates.
For today, the U.S. will announce data on building permits, housing starts and consumer sentiment.
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Gold
Gold prices tumbled to three week lows on Thursday, trading around the $1253 area, pressured by a stronger dollar as solid U.S. economic data add to the possibility of additional rate hikes later this year.
A batch of better than expected economic reports lowered fears the US economy was set for a slowdown in the second quarter, stoking expectations of an additional rate hike this year.
For today, the focus is shifted towards U.S. data on building permits, housing starts and consumer sentiment.
WTI Oil
Crude futures traded close to six-month lows on Thursday, held down by rising U.S inventories and an ongoing supply surplus that persists despite an OPEC-led effort to cut production and rebalance crude markets.
High exports and production from Russia is also contributing to the ongoing glut.
In the United States, which is not participating in any deal to hold back production, oil output has risen more than 10 percent over the past year to 9.3 million bpd, and the Energy Information Administration (EIA) expects that figure to rise above 10 million bpd in 2018.
For today, investors will be watching closely on a fresh oil rig count by Baker Hughes for further signs on the level of supply in the U.S.
US 500
The main U.S. indices were lower after the close on Thursday, as losses in the Basic Materials, Oil & Gas and Consumer Services sectors led shares lower.
A drop in oil prices weighed heavily on U.S. energy sector shares, which contributed to the S&P 500's decline.
Some of the best performers of the session was General Electric Company (NYSE:GE) which rose 1.72%, Caterpillar Inc (NYSE:CAT) which added 1.61% and Boeing (NYSE:BA) Co was up 1.60%.
Some of the worst performers were were Nike Inc (NYSE:NKE) which fell 3.22%, Goldman Sachs (NYSE:GS) that declined 1.45% and Wal-Mart Stores (NYSE:WMT) that was down 1.24%.
At the close in NYSE, the Dow Jones Industrial Average lost 0.07%, while the S&P 500 index declined 0.22%, and the NASDAQ Composite index declined 0.47%.
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