iFOREX Daily Analysis : May 12, 2016
iFOREX | May 12, 2016 05:57AM ET
The dollar remained broadly lower against most major currencies on Wednesday, as investors continue to lock in profits from the greenback’s recent gains, especially against the yen after Japan warned that it is prepared to intervene in the foreign exchange market. The dollar struggled after its rebound from a near 1-1/2-year low against a basket of currencies, with doubts over global growth prospects pressuring the U.S. currency. The dollar was steady against the pound after the U.K. Office for National Statistics said that manufacturing production increased by 0.1% in March, worse than expectations for a rise of 0.3%. The report also showed that industrial production increased by 0.3%, missing forecasts for a gain of 0.5%. The Bank of England's monetary policy committee releases updated growth and inflation forecasts in a quarterly report on Thursday but uncertainty on the "Brexit" is likely to keep the central bank cautious. In addition, Governor Mark Carney, along with other policymakers, is to hold a press conference. The U.S. is to publish the weekly report on initial jobless claims.
EUR/USD
The euro [i] rose considerably against the dollar on Wednesday to halt a six-day drop, as the dollar retreated from two-week highs in a quiet day of trading ahead of the Bank of England's quarterly inflation report. With the sharp gains, the euro closed above 1.14 against the dollar for the first time in three sessions. For today, the markets attention is shifted towards the U.K. growth and inflation forecasts in a quarterly report on Thursday as investors appear cautious due to the possibility of a "Brexit" in the near future. The BOE is largely expected to leave its benchmark interest rate steady at 0.5 this year, even as inflation remains sharply below its 2% target. In the U.S., the jobless claims report is due later in the day.
Gold
Gold [i] gained on Wednesday after a two-day drop, as the dollar fell off two-week highs posted in the previous session, while investors continue to await a controversial Brexit vote in late-June and the next moves from top central banks for further signals on the direction of the global economy. For today, the markets attention is shifted towards the U.K. growth and inflation forecasts in a quarterly report on Thursday as investors appear cautious due to the possibility of a "Brexit" in the near future. According to Fed officials, the Brexit vote could affect the Fed's interest rate decision a week earlier. In the U.S., the jobless claims report is due later in the day.
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WTI Oil
U.S. crude oil prices [i] staged a dramatic reversal on Wednesday recovering after an unexpected drop in crude oil inventories last week pushed oil prices back near 2016 yearly-highs. On Wednesday morning, the U.S. Energy Department's Energy Information Administration (EIA) said that U.S. commercial crude oil inventories decreased by 3.4 million barrels for the week ending on May 6 from the previous week. The massive drop defied expectations for a strong build after the American Petroleum Institute estimated a weekly increase of 3.45 million barrels on Tuesday. Many analysts attributed the drop to the devastating Canadian wildfires, which have closed a number of pipelines throughout Western Canada over the last week.
US 30
U.S. stocks fell sharply on Wednesday, erasing considerable gains from the previous session, as major declines in Macy’s Inc shares triggered a sell-off in the retail sector and a disappointing session by Walt Disney Company (NYSE:DIS) added significant pressure on the Dow Jones Industrial Average [i]. Macy's (NYSE:M), one of the largest retailers in the U.S., dragged down the major indices after missing first quarter sales forecasts and slashing full-year revenue expectations on Wednesday. The Dow lost 1.21%, while the NASDAQ [i] fell 1.02% and the S&P 500 [i] dropped 0.96%, as nine of 10 sectors closed in the red. Stocks in the Consumer Services, Financials and Health Care industries lagged, each falling more than 1% on the session. Stock traders are now focusing on more upcoming earnings as well as the jobless claims report.
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