iFOREX Daily Analysis : October 13, 2015
iFOREX | Oct 13, 2015 05:56AM ET
The dollar remained lower against most other major currencies on Monday, as declining expectations for a U.S. rate hike before the end of the year continued to add pressure on the greenback. Minutes from the Federal Reserve's September policy meeting, published on Thursday, showed that most policymakers thought an initial rate hike should still come this year and that financial market turmoil had not "materially changed" the outlook for the U.S. economy. On Monday morning, Atlanta Fed president Dennis Lockhart indicated that the FOMC will have more economic data at its disposal in December to make the decision versus its meeting later this month In China the trade balance for September came in at a higher surplus than expected, while imports plunged 17.7%, well below the expected drop of 15%, but exports eased 1.1%, better than the 6.3% decline seen. For today, the U.K. is to release data on consumer prices while in the euro zone, the ZEW Institute is to report on German economic sentiment. Traders also wait for the release of a steady stream of economic data later this week for further indications on the strength of the global economy. The main focus is shifted on inflation data both from Eurozone and the U.S.
EUR/USD
The euro rose slightly against the dollar on Monday, reaching its highest level in three weeks as the market is trying to assess whether the Federal Reserve will wait until 2016 before raising short-term interest rates. The currency pair traded in a broad range between 1.1268 and 1.1397 for the day. On Monday morning, Atlanta Fed president Dennis Lockhart indicated that the FOMC will have more economic data at its disposal in December to make the decision versus its meeting later this month. Last week, Lockhart said he will keep a close eye on U.S. consumer spending data as he weighs his decision. Separately, Chicago Fed president Charles Evans said on Monday that he would prefer to wait until 2016 to raise rates, citing soft inflation data. For today in the euro zone, the ZEW Institute is to report on German economic sentiment as investors await for the inflation reports from both continents toward the end of the week.
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WTI Oil
Crude oil pulled back from an 11-week high on Monday, closing almost 5% lower at $47.10 a barrel. The energy industry had surged last week after a sharper-than-expected drop in crude inventories and crude oil's brief rally above $50 a barrel inspired hope that the sharp drop in commodities had found its bottom. Separately, Kuwait oil minister Ali al-Omair offered no signals on Monday that OPEC will alter its production strategy, days after reports surfaced that Saudi Arabia and Russia could meet again in the coming weeks to craft a strategy to stabilize crashing prices. Russia has reportedly urged OPEC to lower supply levels over the next year, it still appears reluctant to surrender market Crude oil prices found some support on Tuesday after positive exports data, while investors await for industrial inventory data from the API later in the day.
S&P 500
Coming off their best week of the year, U.S. stocks treaded water on Monday as investors look for a clear indication about the direction of corporate earnings. Stock displayed little momentum to start the week, looking ahead to reports from JPMorgan (N:JPM) and Intel (O:INTC), scheduled for Tuesday, that are likely to offer signals about the strength of the U.S. economic recovery. The S&P 500 was up 0.12%, the Dow Jones Industrial Average added 0.28%, and the Nasdaq gained 0.17%. Analysts expect S&P 500 companies to report a 4.8% decline in third-quarter earnings and 3.6% drop in revenue, according to Thomson Reuters. Continued strength in the U.S. dollar and crude oil near 2015 lows are expected to have been the main challenge to growth over the three-month period.
Twitter (N:TWTR)
Twitter fell by nearly 7% on reports it is set to announce company-wide layoffs this week which will possibly affect all departments. Twitter has around 4,200 employees as of the end of last quarter, more than double the number it had when it floated in 2013.
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