Market Update – 25-07-2016
AvaTrade | Jul 25, 2016 04:54AM ET
This will be an important week with a lot of important data most notably the GDP data out for the UK on Wednesday. Later on Wednesday we also have the FED interest rate decision (where no change is expected) and the FOMC statement. The statement will be very important as it is likely there will be a reference to the Brexit, and also possible hints if there is still a chance the FED will raise the interest rate this year. While Friday is the end of the week, we can expect a lot of volatility, as the BOJ will meet and we will know if and what measures they will take.
In addition we have a lot of companies reporting their earnings this week, such as Apple (NASDAQ:AAPL), McDonalds and Twitter on Tuesday; Boeing (NYSE:BA) and Facebook (NASDAQ:FB) on Wednesday, Coca Cola, Google (NASDAQ:GOOGL), Potash and LinkedIn (NYSE:LNKD) and Royal Dutch Shell (LON:RDSa) on Thursday; To close the week we will have Barclays (LON:BARC), Exxon (NYSE:XOM) and Chevron (NYSE:CVX). Obviously there are many more, but those are the main ones.
h3 Currencies/h3EUR/USD – dropped on Friday towards the support around the 1.095 level as the USD strengthened. The reason for this is that there is a rising expectation that the FED will raise the interest rate after all this year as there has been some stronger data out of the US. We will probably know more on the chances for this when we will get the FOMC statement on Wednesday.
USD/JPY – is once again trading around the 106.3 level as we mainly will be waiting for Friday when we will finally know what the BOJ and the Japanese government will do regarding stimulus measures and monetary policy. During the G20 meeting this weekend BOJ Governor Kuroda said that the BOJ would ease monetary policy if needed in order to reach its inflation target, but reaffirmed that helicopter money is out of the question.
GBP/USD – dropped as the PMI data was mixed, but did show a large drop compared to the previous month. This is obviously causing concern on how the Brexit will influence the rest of the data and we will know more soon as we will be getting the data next month for the post Brexit vote period.
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USD/CAD – continued to rise and has been trading right above the resistance at the 1.312 level as we saw yet another decline in oil prices on Friday.
S&P 500 – is looks like the rally is losing some steam around the 2170 level. This week we will have an important week with a lot of companies reporting their earnings along with the FOMC statement.
Gold – has been steadily been moving down over the last 2 weeks as risk sentiment has improved and thus the need for a safe haven decreased. In addition this caused a strengthening of the USD, further bolstered by an increased likelihood that the FED will increase the interest rate this year.
Oil – broke below the support we were able to find for a while around the 44.40 level, but in the end this level was unable to hold. This resulted in oil trading at the lowest level since May. The strong USD is also driving oil prices down, but it is without a doubt that the main reason for the drop is the remaining oversupply of the market. How much oversupply is there then? Well, according to the EIA the inventories were at nearly 520 million barrels last week, which is very high. In addition we could see an increase in production as well as another increase in the number of active rigs.
Yahoo (NASDAQ:YHOO) & Verizon – it appears that Verizon has won the bid to take over the internet business of Yahoo for around $5 billion.
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