Currencies
EUR/USD – was trading up due to a weaker USD and also positive data out of the Eurozone. This changed after the housing data out of the US was much stronger than expected and we dropped below the 1.13 level once more during the night. The current level we are trading at, can be seen as a short term support. German GDP data was as expected so we will be waiting for later in the day for the existing home sales out of the US.
USD/JPY – is climbing up again above the 100 level as the USD is strengthening a little bit. Over the last few days we can see little volatility in the pair, something that can be seen by the converging Bollinger bands. This usually indicates that a large movement is imminent.
GBP/USD – crossed the 1.32 level for the first time since early August, but dropped below this level again after the US data. With more data out the US today and tomorrow, and mortgage approvals out of the UK today. Friday will be crucial with GDP data not only from the US but also from the UK, so that promises to be an important day, especially with Yellen speaking the very same day.
Indices
S&P 500 – marked yet another record intraday high as we are edging ever closer to the 2200 level. It was only at the beginning of this year, that we were trading at the low 1800 levels, so that means that in around 6 month we have moved up 21.50%!
Commodities
Gold – was unable to hold onto its gains and pared the gains after the housing data out of the US was much better than expected. Obviously, any positive data out of the US is now increasing the prospects of a rate hike in the near future, and thus pressures gold down. Once again we had a FED member say that a rate hike is warranted if the job trend continues, making the upcoming NFP possibly crucial.
Oil – moved sharply higher yesterday after it was reported that Iran is showing some positive signs it would be willing to agree to a production freeze, as it is nearing pre sanction production levels. As mentioned many times before, it appears unlikely an agreement will be reached, although if true, this certainly increases the likelihood of this happening. However, even if an agreement is reached, there are 2 major issues. The first is at what level they will freeze production, and if this is for all countries. As Saudi Arabia, Iraq and others are producing near record levels, but others, such as Nigeria and Libya are producing under their usual capacity. The second aspect is that higher prices will undoubtedly bring back at a faster pace US producers, which means that the oversupply situation will not be solved, perhaps even quite the opposite. We saw production increase already last week, combined with a steady increase of the number of active rigs. The crude stock also showed a large increase, instead of the expected decrease, and we will be looking at the inventories today for a confirmation as well as to see if production increased again.
Stocks
Tesla (NASDAQ:TSLA) – moved sharply up after Elon Musk Tweeted that he had something new to announce, but quickly dropped when the news was actually announced. The news was that Tesla has increased the speed and range of its cars by tweaking the battery pack.