The US Dollar gained on Friday as in the US a bipartisan deal was reached to extend the budget and thus ending this very short overnight government shutdown. The US Dollar Index (USDX) which measures the Dollar’s performance against other major currencies closed 0.16% higher and thus gaining for the sixth consecutive trading day for the first time since last December.
Gold declined amid a strong Dollar and the US government shutdown being lifted. Oil closed lower on Friday with the biggest week loss in over three years as the Baker Hughes Oil Rig count increase by 26, reaching a level not seen since April 2015.
US equity indices closed higher in another highly volatile trading day with the Volatility Index (VIX) reaching at a high almost as high as during Monday’s sell-off.
Cryptocurrencies continued their rise on Friday and part of Saturday but could not hold the gains during trading on Sunday. Ripple which saw a stellar rise in December to over $3 at its peak and the falling under $0.6 during this February sell-off managed to climb to the $1 level during the weekend. A new fork to the Bitcoin is planned for the end of February – the Bitcoin Private – with the goal to create a coin based on Bitcoin but with improved privacy features.
Switzerland releases its Consumer Price Index (CPI) data on Monday. The United States are due to publish the level of the Treasury Budget.EUR/USD
The EUR/USD closed again lower against the Dollar but only with a small margin. While in the US traders were relieved that the government shutdown lasted only a few hours if the night from Thursday to Friday, in the Euro-Zone the monthly Industrial Production (IP) in France +0.5% (expected +0.1% / previous -0.5%) and Italy +1.6% (expected +0.8% / previous +0%) was better than expected.
Key economic data from Europe is expected for Wednesday with German and Italian and EU Gross Domestic Product (GDP) as well as German Consumer Price Index (CPI) and European IP. The US will also publish CPI data on Wednesday.
Gold settled lower at a one month low as the Dollar continued to strengthen. The quick resolution of the US government shutdown might have further pressured gold as insecurity about government funding was resolved in these volatile times. As the 10 Year US Treasury Note remained close to its 3½ year high gold traders could have felt a continued uncertainty. According to one theory, higher high grade bond yields weigh on the price of gold as both are considered safe havens but only bonds generate accruing income via interest.
As central banks consider inflation one of the key aspect for deciding how to manage their monetary policy, gold traders could be interested in the release of CPI numbers this Wednesday in the US and Germany.
Oil and other energy commodities were again facing a day of significant declines as WTI and Brent both lost over 2% and WTI declined during last week the most on a weekly basis since over 3 years. Concerns over expanding US oil production, as higher oil prices make it again profitable for many producers in the US to extract oil. The Baker Hughes Oil Rig count in the US showed a significant increase of operating oil rigs at 791, whereas in the week before only 765 operating oil rigs were reported.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
US equity indices had another day of high volatility and started declining from the start of the American trading session, before they raced upwards in the last hour of trading and settling higher. Utilities (US Utilities ETF +1.98%) and technology (US Technology ETF +1.86%) stocks showed the biggest gains in Friday’s trading, while energy (US Energy ETF (NYSE:XLE) -0.37%) stocks declined amid falling energy commodity prices.
Shares of the chip designer Nvidia surged up by 6.03% as its Q4 earnings surpassed analysts’ expectations supported by strong demand in gaming, cryptocurrency and data centre segments.
While this earnings season saw data published from many companies already, in the following week among others, PepsiCo (NASDAQ:PEP) publishes earnings on Tuesday, Cisco Systems (NASDAQ:CSCO) on Wednesday and Yandex on Thursday.
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