Currencies
EUR/USD – broke out of the wedge after it appeared to breaking below it. However, it remains to be seen how much upside there is for the EUR as there are quite a few obstacles preventing a sustained strengthening of the EUR, also shown in the weak growth we saw in the German data. After the Dutch and French elections, it could be that some anxiety will disappear. However, we also have the Greek crisis which will get its next chapter in the next few days.
USD/JPY – the pattern is still in place as we were nearing a reversal, but we stopped short of reaching the 115.36 level. We started moving down straight after rising on the backdrop of the strong US data, although industrial production dropped and this is what apparently what got most focus.
GBP/USD – the data out of the UK wasn’t very good and this came on the backdrop of the lower inflation of the previous day which lowered the chances of a rate hike by the BOE. However, as the USD weakened in the course of the day, we saw that the day ended more or less unchanged.
AUD/USD – as usual Australia’s employment data is very volatile and this time was no different. The unemployment rate dropped and more people found work, but the participation rate dropped. The mixed picture led to no major movement in the AUD.
Indices
Dollar Index – even though the vast majority of data was good or even very good, industrial production declined and also FED Chair Yellen’s comments that the US economy was weak spooked people and led to a weakening of the USD, as some are taking this comment as a sign that the US economy will not be able to handle higher interest rates, even though the previous day she said that they shouldn’t wait too long raising the rates.
Dow Jones 30, Nasdaq 100 & S&P 500 – all of them reached record highs yet again for the fifth consecutive day. This all comes due to optimism that President Trump’s tax plan will indeed benefit business and with that will obviously increase profits. In case plan does not meet expectation we can see a big reversal as a lot of the gains are based on expectation and also hopes for the tax plan and obviously also loosened regulation.
XLF – it took quite a few attempts for the XLF to break through the resistance, but once broken through, it has risen quite a lot already.
Commodities
Gold – appeared to be breaking below the support around the 1224 level, but with the sudden weakening of the USD, we moved well above that level to approach the resistance near the 1240 level.
Natural Gas – dropped again considerably and is so far not having a good start of the year, having dropped already over 13%. As was the case last week, the expectation for better weather in the US is causing natural gas to drop as that will reduce the demand for natural gas.
Oil – the EIA confirmed the API data and we saw yet another large build of oil inventories in the US, while production was practically unchanged. We would expect oil to drop on this news, but what we have seen also the previous two weeks, instead of dropping, we saw oil jump higher. This time though it didn’t last long and eventually dropped. Inventories in the US are rising quite fast and have reached the highest level on record. The previous high was reached in April last year when it stood at 512 million barrels, but we are now already standing at 518.1 million barrels, more than 45.3 million barrels more than at the same time last year!
Kuwait is also planning to increase its oil production by another half a million barrels once the production cut deal expires.
Stocks
Apple (NASDAQ:AAPL) – again marked a new record high to reach a market capital of over $720 billion!
Teva – after reaching a 10-year low last week it has since then climbed over 15% boosted for a large part also by its better than expected earnings.
Verizon & Yahoo (NASDAQ:YHOO) – have reportedly reached a new agreement whereby Verizon will pay less for buying Yahoo’s internet business after the recent publicized security breaches in Yahoo accounts.