Currencies
EUR/USD – dropped sharply after the inflation data out of the US came in better than expected, which in turned fueled the possibility that the FED could still, after all, raise the interest rate this week. The market doesn’t really expect this, although the USD did manage to strengthen, as it does solidifies the changes of a rate hike this year. We can see that there was a bit of support around the 1.115 in the beginning of the month, but for now we are testing the resistance around the 1.117 level.
USD/JPY – the USD managed to strengthen convincingly against a broad range of currencies, but not against the JPY, although we still moved up. This comes as there still remains some skepticism on what action the BOJ will take this coming Wednesday. No matter what happens, we can expect some large moves, with either a drop below the 100 level, or an upwards move towards the 105 level and possibly higher, depending on the action.
GBP/USD – saw a very sharp drop, and while already trading down on Friday, after the better than expected inflation data out of the US, the drop steepened. We dropped shortly below the 1.30 level, but are trading slightly above this level at the moment. The GBP lost over 300 pips last week against the USD as there is still a good change that the BOE will cut interest rates further and also the expectation that the FED will increase the rate, if not this week then in December. Negotiations on a Brexit are expected to start in the beginning of 2017 according to Donald Tusk, President of the European Council.
USD/CAD – reached the highest level since the end of July as not only the USD strengthened, but also oil dropped to the lowest level in a month and also the data out of Canada wasn’t great. This morning we are dropping again as the USD is correcting some of its gains and also oil has moved up a bit. The nearest support can still be found around the 1.312 level.
Indices
S&P 500 – moved down after the better than expected inflation data, but was able to find support at the support level around the 2122 level. This comes for a good part also because Intel (NASDAQ:INTC) moved up on reports on better results for the third quarter.
Commodities
Gold – moved down as the USD strengthened sharply, but the 1300 level did not come into play. As already mentioned last week we are seeing that gold moved as expected, although the moves are relatively limited.
Silver – has been able to find some support recently on a pretty old upwards trend line.
Oil – dropped on Friday amid a stronger USD as well as lingering worries about the oversupply. We reached the lowest level in a month although we closed close to the support level. In addition there were some comments that the purpose of the meeting next week will not be to make decisions, but rather for consultation. However, this morning the Venezuelan President said that an agreement is close on how to stabilize the market. Libya is also still struggling to increase its production and exports, which is causing oil to move a bit higher today, in combination with a weaker USD. We saw that the number of active rigs increased once again, so oil production in the US appears not weakening.
Stocks
Intel – has raised the outlook for the third quarter as it sees some signs of an increased demand for PC’s.
Johnson & Johnson (NYSE:JNJ) – reported on Friday that it will buy the eye health unit of Abbot Laboratories for $4.3 billion.