iFOREX Daily Analysis : October 03, 2016
iFOREX | Oct 03, 2016 06:12AM ET
The dollar retreated from one-and-a-half week highs against the euro on Friday and gained ground against the safe haven yen and the Swiss franc, as concerns over the health of Deutsche Bank (DE:DBKGn) eased.
The single currency was boosted as Deutsche Bank shares rebounded following reports that it is nearing a deal to settle a mortgage-securities investigation by paying a $5.4 billion fine, well below the Justice Department’s original proposal of $14 billion.
In the week ahead, traders will be focusing their attention on Friday’s nonfarm payrolls report, seen by many as the clearest sign on the health of the labor market, amid ongoing speculation over whether U.S. interest rates will rise this year.
Today financial markets in Shanghai will be closed for a national holiday, and German financial markets will also remain closed for a holiday. The U.K. is to release data on manufacturing activity, while in the U.S., the Institute of Supply Management is to report on manufacturing activity.
USD/JPY
The yen weakened in Asia along with the Aussie on Monday, as investors noted a slew of manufacturing PMIs regionally and the start of a week-long holiday in China.
In Japan, the third quarter Tankan survey showed the large manufacturing index at plus-6, below the plus-8 figure expected and unchanged from the previous period. In the second quarter survey, companies on average continued to revise down their inflation outlook for one and five years ahead from three months ago as core consumer prices, which exclude fresh food, continued to be weak and private demand remained sluggish.
In the coming week, the U.S. nonfarm payrolls report on Friday is seen by many as the clearest sign on the health of the labor market, amid ongoing speculation over whether U.S. interest rates will rise this year.
Gold
Gold prices erased early gains to end lower on Friday, as concerns over the prospect of a U.S. rate hike before the year’s end overshadowed concerns over the health of Deutsche Bank.
The yellow metal typically rise during times of political or economic uncertainty, amid expectations that bullion will hold its value better than other assets. For the week, the precious metal ended down 1.79% as markets continued to speculate over the timing of the next Fed rate hike.
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The Fed’s next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely. Investors currently price a 55.7% chance of a rate hike at the Fed's December meeting; according to federal funds futures tracked by the Fed Rate Monitor Tool.
WTI Oil
Oil futures finished higher for the third day in a row on Friday, as sentiment remained supported after OPEC members agreed on output cuts for the first time in eight years, despite some skepticism among analysts over the implementation of such an agreement.
The 14-member oil group said it will finalize a plan to make those decisions at the official OPEC meeting in Vienna on November 30, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.
In the week ahead, oil traders will focus on U.S. stockpile data on Tuesday and Wednesday for fresh supply-and-demand signals; but they will also continue to monitor supply disruptions across the world, for further indications on the rebalancing of the market.
US 500
U.S. stocks were higher after the close on Friday, as gains in the Oil & Gas, Healthcare and Consumer Services sectors led shares higher.
At the close in NYSE, the Dow Jones Industrial Average rose 0.91%, while the S&P 500 index climbed 0.80%, and the NASDAQ Composite index added 0.81%.
In the week ahead, traders will be focusing their attention on Friday’s nonfarm payrolls report, seen by many as the clearest sign on the health of the labor market, amid ongoing speculation over whether U.S. interest rates will rise this year.
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