During this week the markets have been subject to numerous confirmations regarding: the price of oil that continues to fly low, the major stock exchanges that continue to close with a negative sign and the continuous rise in the EUR / USD. Let’s see in detail what happened during the last week.
Major European Stock Exchange closed with heavy losses and the causes of this second week under a negative sign have been many.
It depended first of all from EUR/USD that continues to rise despite the positive data of retail sales and PPI in USA. At the moment, the exchange rate is around 1,09.
The reason of this could be attributed to the expectations about the rise in US interest rates. We have to wait till next week (on Wednesday) to know what the FED will decide about it.
Another cause can be attributed to the low prices of oil. Oil prices remained at 2009 lows in the Friday session and the Middle East production continues to increase despite the odds between the supply and the demand.
Also the WTI future fell under $ 36 per barrel (first time after February 2009) and the Brent approached 38 dollars. However, Opec announced that will keep these levels of production with more than 31,5 millions of barrel per day.
While Wall Street was in positive, also the Asian markets have been down with the Yuan to a minimum of four years against the US dollar. The People’s Bank of China (PboC) continues with the maneuvers to devalue the country’s currency and it lowered the interest rates.
Japan Nikkei celebrates Yen weakness thanks to the Wall Street strong performance.
As we said before, the US data, relating to retail sales and producer prices, showed an improvement compared to consensus. The retail sales have been + 0.2% in November (m/m) and the producer prices in the second half has been + 0.3%.
The gold price touched the lowest level since the spring of 2010 with the possibility of a collapse below $ 1,000. The slowdown of the US dollar has allowed the price of gold to catch his breath after a very negative phase which had caused a disastrous drop by $ 1,180 in late October to $ 1,046 a few days ago.
Also the performance of silver has been not so good since a few days ago it fell below $ 14 per ounce.
Brazil economic crisis has no end. This recession is the worst from the one in 1929. It is not only about economics but also politics and finance. The inflation rates is about 10% (it has reached 15% during summer) and the Banco do Brasil has fixed the Selic rate to 14,25%.
What will happen during next week? Above all, there will be the decision of the FED about interest rates, so pay attention to EUR/USD. And then: consumer price index (CPI) of Italy on Monday; PMI indices in France, Germany and Euro zone on Wednesday; Japan interest rates decision and the conference of Kuroda, BoJ’s President on Friday.