Posted on 2nd August 2015 by barry norman in Stockpair Daily Insight

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A Fresh New Month A New Beginning For Commodities

August 3, 2015

Barry Norman

Commodities headed for the biggest monthly decline in almost four years on concern that supplies are rising as demand slows, sending copper to a six-year low and oil into a bear market.

The Bloomberg Commodity Index has retreated 10% in July, the most since September 2011, after sinking to a 13-year low this week. The prospect of higher borrowing costs in the US strengthened the dollar and drove gold to the lowest in five years. Brent crude’s third month of losses has fuelled more cost cuts by the biggest producers including Royal Dutch Shell and BP Plc. Crops from wheat to corn and soybeans are set for their worst monthly performance this year.

Commodities are falling out of favor with investors as demand in China, the biggest user of everything from metals to energy, is faltering amid expanding inventories of copper and oil. The Federal Reserve is moving closer toward raising rates, boosting the dollar and curbing the appeal of raw materials as they become more expensive for holders of other currencies.

oil monthly

Oil prices fell on Friday, with U.S. crude set to post the largest monthly drop since the 2008 financial crisis, after signs that top producers in the Middle East were continuing to pump at record levels despite a growing global gut.

Uncertainty ahead of key U.S. oil production and rig count data due later in the day also weighed on oil despite a weaker dollar on Friday that normally would be supportive to commodities. That aside, heavy hedging activity in gasoline and diesel futures ahead of front-month contract expiry dominated play on the petroleum complex, diverting attention from crude futures.

Futures of global benchmark Brent and U.S. crude oil were down more than 1 percent each on the day. Brent was down almost 4 percent on the week, declining for a fifth week in a row.

Through July, U.S. crude was down 20 percent, its largest monthly decline since October 2008, when oil had an epic collapse at the outbreak of the financial crisis.

oil monthly

Posted on 1st August 2015 by barry norman in Stockpair weekly Insights

Major Economic Events for the week that you should be monitoring:

Time Cur. Event
Saturday, August 1, 2015
05:00   CNY Manufacturing PMI (Jul)
Monday, August 3, 2015
05:45   CNY HSBC Manufacturing PMI (Jul)
11:55   EUR German Manufacturing PMI
12:30   GBP Manufacturing PMI (Jul)
18:00   USD ISM Manufacturing PMI (Jul)
Tuesday, August 4, 2015
05:30   AUD Retail Sales (MoM) (Jun)
08:30   AUD Interest Rate Decision (Aug)
12:30   GBP Construction PMI (Jul)
Wednesday, August 5, 2015
02:45   NZD Employment Change (QoQ)
12:30   GBP Services PMI (Jul)
16:15   USD ADP Nonfarm Employment
18:00   USD ISM Non-Manufacturing PMI
Thursday, August 6, 2015
05:30   AUD Employment Change (Jul)
12:30   GBP Manufacturing Production
15:00   GBP Interest Rate Decision (Aug)
Friday, August 7, 2015
16:30   USD Nonfarm Payrolls (Jul)
18:00   CAD Ivey PMI (Jul)

 

Global Exchanges

Wall Street closed as weakness in the energy sector outweighed modest gains elsewhere. Earlier, a closely watched measure of employment costs decelerated in the second quarter, sparking hopes that the Federal Reserve may delay rate hikes this year. Analysts pointed out that weak wage growth is a symptom of slowing growth, which does not bode well for corporate earnings.

The S&P 500 closed 4.71 points, or 0.2%, lower at 2,103.90. The index ended July roughly at the same level it finished in May, erasing all of the previous month’s losses. The weekly gain for the benchmark stood at 1.2%, while it booked a 2% gain over the month. The Dow Jones Industrial Average slipped 55.32 points, or 0.3%, to 17,690.66, but ended the week with gains of 0.7% and booked a 0.4% gain over the month.

The Nasdaq Composite ended the session less than a point lower at 5,218.28. The tech-heavy index rose 0.8% over the week and 2.9% over the month.

global equities

Currency Markets

The dollar’s strong performance in July followed a weak showing in June, when the dollar finished the month lower against other major currencies. It finished the month up 1.4% against the euro, its best monthly performance since May.

But its weekly performance wasn’t as impressive. Data released this week showed the U.S. economy grew at a slower-than-expected rate in the second quarter, and that wage inflation during the same period was weaker than previous data had implied.

The euro soared above $1.11 early Friday after the release of the U.S. employment-cost index, which showed that costs for employers grew at a much weaker than expected pace in the second quarter. The shared currency traded at $1.0984.

global currency

Commodity Markets

Gold futures ended with a daily gain Friday, reversing an early loss after a weaker-than-expected rise in U.S. labor costs, but still ended an ugly July with the biggest monthly decline in more than two years. For the month, gold logged a 6.5% July loss on a most-active basis, the biggest drop since a slide of more than 12% in June 2013.

Crude-oil futures closed lower with West Texas Intermediate crude giving up $1.40, or roughly 2.9%, to settle at $47.12 a barrel. Already under pressure, oil futures extended declines after oil-services firm Baker Hughes said the number of U.S. oil rigs rose by five to 664, oil-services firm Baker Hughes reported

Posted on 31st July 2015 by barry norman in Stockpair Daily Insight

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US Growth Improving

July 31, 2015

Barry Norman

The US economy expanded at a faster pace in the second quarter and managed to eke out a gain at the start of the year, painting a picture of incremental progress consistent with the Federal Reserve’s view.

Gross domestic product rose at a 2.3 percent annualized rate, and a revised 0.6 percent advance in the first quarter wiped out a previously reported contraction, Commerce Department data showed Thursday in Washington. The median forecast of 80 economists surveyed by Bloomberg called for a 2.5 percent gain. Consumer spending grew more than projected, and price increases accelerated.

united-states-gdp-growth

The Fed has made it clear it wants to hike rates this year, and some in the market fear that it must raise rates to avoid unintended consequences of its zero-rate policy. “The economy’s not fantastic, and we have a need for duration. You put a Fed hike in here, and you put in a month-end bid, and you’ve got a curve flattening going on here,” an analyst said.

The July FOMC meeting was never expected to bring fireworks and the markets got it right. There were no new forecasts and no press conference was scheduled. On top of that, there was only one month of new data since the June 17 meeting. Market activity was shallow due to the holidays, making an, eventual, change in policy difficult to implement without unnecessary volatility. In such context, it is no surprise that the policy rate remained unchanged in the 0‐to‐0.25% range. Nevertheless, while the FOMC provided no clear signal on the timing of the lift‐off, a few hints in the statement clearly suggest that it is gradually moving to the start of its tightening cycle. The September meeting remains our favorite for the lift‐off, but as usual it will depend on the data.

The Fed statement along with the upward revision of GDP for the previous month saw the US dollar soar by 59 points to 97.81 sending the euro down 81 points to 1.0903.

Gold was down $4.40 to 1089.00 supporting hopes that the Fed would act in September. Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.

currency

 

Posted on 29th July 2015 by barry norman in Stockpair Daily Insight

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Feds Leave September Increase On The Table

July 30, 2015

Barry Norman

facebook earningsThere were two headline events today. Both received endless press coverage. This was the Federal Reserve meeting and Facebook earnings. Which stirred the markets the most is hard to say? Bets are Facebook was more interesting.

A rate hike could be here in 6 weeks. That’s the Federal Reserve’s main message Wednesday. America’s first interest rate hike in almost a decade could come on September 17 when the Fed holds its next meeting. It’s being dubbed a “liftoff” moment, since interest rates are currently close to 0%.

The Fed has been clear for months that it will only raise interest rates when it believes the U.S. economy is strong enough. It looks especially closely at the health of the job market and inflation. In its statement Wednesday, the Fed sounded cautiously optimistic that America is back on track economically.

The US dollar traded at 97.24 while the euro dipped to 1.0908.Gold saw little action to trade at $1096.

Facebook shares fell after its earnings report, even though earnings and revenue beat estimates hands down. Despite the beat, the stock dropped as much as 4.6% after-hours, although it rose during the company’s earnings call, before dropping back down about 2.25%.

We’re not sure why the stock is dropping, but our best guess is because Facebook missed on daily active user expectations. Despite the beat, Facebook shares fell about 5 percent in after-hours trading soon after the announcement, but then pared those losses as traders digested the report and comments from executives. Saying he couldn’t comment on the extended-hours stock movement, Wehner emphasized that “the important story here is we’re executing well on the business, the community is growing, and engagement is strong.”

Facebook’s CFO, for his part, doesn’t seem to think the stock should drop. On CNBC, he called the quarter “great, any way you look at it.”

The company said its adjusted second-quarter earnings came in at 50 cents per share on $4.04 billion in revenue. Wall Street analysts forecast Facebook would deliver earnings of 47 cents per share on $3.99 billion in revenue, according to a consensus estimate from Thomson Reuters.

us markets wed

Posted on 29th July 2015 by barry norman in Stockpair Daily Insight

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Get Ready For The FOMC

July 29, 2015

Barry Norman

dollar puzzel forexwordsThe dollar is trading in the green but really without direction ahead of the Fed statement due tomorrow afternoon. The greenback is trading at 96.94 up by 30 points while the euro tumbled 49 points to 1.1039. The Fed’s two-day meeting kicks off on Tuesday, with a statement that could potentially offer some clues over the timing of the first rate hike due out on Wednesday.

“The Federal Reserve has been intentionally vague in relation to when interest rates will rise, but traders view this as a sign that the US central bank is in no hurry to push rates higher,” said IG’s market analyst David Madden. “There’s a feeling among traders that Janet Yellen is paying lip service to the idea of a 2015 rate hike, and any hawkish comments are intended as a warning rather than an actual heads-up.”

Moving away from the FOMC meeting, US house prices climbed 1.1% month-on-month in May, according to the Case-Shiller 20-city composite index released on Tuesday. Meanwhile, the US service sector expanded at a faster rate in July but confidence over the business outlook fell to a three-year low, data released on Tuesday showed.

The Markit Flash US Services Purchasing Managers Business Index rose to 55.2 in July, rebounding slightly from the five-month low recorded in June and remained above the 50.0 threshold that signal expansion. US consumer confidence suffered a sharp setback in July, retreating to its lowest since September 2014.

The University of Michigan’s consumer confidence gauge retreated to a reading of 90.9 from a previous month’s reading of 99.8, falling short of analysts’ expectations for a 100.0 reading.

fear and greed

FOMC members are likely to emerge from their policy meeting with short-term interest rates still pinned near zero, though they could send fresh hints that they’re getting closer to raising rates. Fed Chairwoman Janet Yellen emphasized in congressional testimony earlier this month she expects the central bank to start lifting its benchmark federal-funds rate at some point before year-end.

Her comments and other recent public statements by Fed officials have made clear that July is too soon. Though the economy is growing moderately after contracting in the first quarter and employers are hiring at a solid pace, inflation remains stubbornly below the Fed’s 2% target and officials want to be more confident it is going to rise before acting.

This week “might be a little early. I think we’ll use that meeting to assess the data,” James Bullard, president of the Federal Reserve Bank of St. Louis, said last week on Fox Business Network. He added, “I’d see September having more than a 50% probability right now.”

currency tuesdays

Posted on 28th July 2015 by barry norman in Stockpair Daily Insight

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Traders Stressing But Why?

July 28, 2015

Barry Norman

trust your instinctThis morning, the sell-off in China continued with the Shanghai Composite ending 8.5% lower. Also European shares extended their correction, losing around 2%, despite slightly strong eco data.

The German IFO business climate indicator picked up unexpectedly in July, rising from 107.5 to 108.0. Domestic demand remains the main growth driver in Germany, while no big impulses should be expected from exports, the Institute added. Also the Greek deal supported business sentiment.

Today, risk-off sentiment remained the dominant factor for USD trading. This morning, the dollar was hit hard against the euro. Later in the session, USD/JPY took the lead in the risk-off decline of the dollar. The German IFO and the US durable orders were a bit better than expected but had no lasting impact on currency trading. The greenback is down 82 points at 96.52 unable to get a leg up while the euro gained 123 points to 1.1107. The question is why? The answer is not obvious, but something spooked investors today but what no one knows exactly.

The Dow Jones saw a triple-digit tumble Monday, helping lead a sharp drop in the main U.S. indexes sparked by a Chinese stock-market rout. Investors sold risky assets such as equities and commodities and piled into havens such as Treasury’s and gold. The Dow Jones fell 135 points, or 0.8%, to 17,433, with all of its 30 components trading lower.

us markets monday

US June durable-goods orders rose 3.4%, exceeding analysts’ expectations. However, business investments and shipments remained soft. Investors this week are getting ready for the closely watched Federal Reserve meeting on Tuesday and Wednesday, waiting for clues on the timing of a rate rise.

The Federal Reserve is getting more comfortable with the plan to raise rates in September than investors now realize, according to a keen outside observer of the U.S. central bank. The result of the Fed’s meeting is likely to be that they are going to be much more comfortable than many people imagine going in September.

Gold traded at 1104.40 up by $11 on Monday. Gold rebounded from their lowest level in more than five years, finding support from weakness in the U.S. dollar to trade near $1,100 an ounce, but analysts said prices haven’t likely hit bottom just yet.

The yellow metal was benefiting from haven demand as stocks mostly retreated world-wide, led by a major selloff in Chinese equities, but technical analysts attributed Monday’s rebound in gold to technical factors.

Posted on 27th July 2015 by barry norman in Stockpair Daily Insight

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Countdown To The FOMC

July 27, 2015

Barry Norman,

Director, Investors Trading Academy

fomc forexwordsOn Friday, the dollar pulled back against the yen, but pushed higher against the euro and the pound, after official data showed new-home sales dropped 6.8% in June, the weakest reading in seven months. There was little market-moving data this week to move the dollar. The ICE U.S. dollar index has fallen 0.7% since the beginning of the week to 97.3110. The U.S. dollar climbed against most major currencies Friday as investors were awaiting the closely-watched Federal Reserve meeting next week, in hope of getting further rate-hike signals.

The Federal Open Market Committee (FOMC), the policy-setting arm of the U.S. central bank, will meet Tuesday and Wednesday to discuss the country’s near-term direction of monetary policy. Recent strong economic data has been bolstering market speculation for an interest-rate hike by the year-end.

Fed Chair Janet Yellen and some other Fed senior officials have also stressed several times recently that U.S. benchmark rates will go up later this year if the economy keeps expanding.

On the U.S. economic front, sales of new single-family houses in June registered at a seasonally adjusted annual rate of 482,000, which was 6.8 percent below the revised May rate of 517,000, the Commerce Department said Friday. The downbeat report took some of the shine off the housing outlook.

weekly currencys

The euro fell to 1.0980 dollars from 1.1002 dollars in the previous session, and the British pound dropped to 1.5511. The Australian dollar decreased to 0.7278. The U.S. dollar bought 123.75 Japanese yen, lower than 123.81 yen of the previous session. The U.S. dollar rose to inched up to 1.3068 Canadian dollars.

Gold slid more than one per cent in the global market on Friday to its lowest since early 2010 as fresh strength in the dollar prompted another wave of selling, putting the metal on course for its biggest weekly loss in nine months. Gold has been hurt this year by expectations that the US Federal Reserve is on track to raise interest rates for the first time in nearly a decade, boosting the opportunity cost of holding non-yielding bullion while lifting the dollar. “It feels as though the driver in this market, aside from the impetus we got from China, is that if you get any kind of dollar strength, gold goes down,” Natixis analyst Nic Brown said. “But the flip side of that simply doesn’t support prices.”

gold and silver weekly

Posted on 25th July 2015 by barry norman in Stockpair weekly Insights

 

The-Week-Ahead forexwords

Major Economic Events for the week that you should be monitoring

Time Cur. Event  
Monday, July 27, 2015  
    EUR German Ifo Business Climate
    USD Core Durable Goods Orders
Tuesday, July 28, 2015  
    GBP GDP (QoQ) (Q2)
    USD CB Consumer Confidence (Jul)
Wednesday, July 29, 2015  
    USD Pending Home Sales (MoM)
    USD FOMC Statement
Thursday, July 30, 2015  
    EUR German Unemployment
    USD GDP (QoQ) (Q2)
Friday, July 31, 2015  
    EUR CPI (YoY) (Jul)
    RUB Interest Rate Decision (Aug)
    CAD GDP (MoM) (May)

 

Global Exchanges

Wall Street fell for the fourth straight session on Friday, leaving indexes with the biggest weekly losses in months. Investors sold stocks of materials, energy and industrials companies after a dramatic slide in oil and gold prices as well as disappointing earnings results from companies such as Caterpillar and Freeport McMoRan Inc. while Amazon shares soared 10% after surprise profit growth, but gains were not enough to stem selling pressure on main indexes.

The S&P 500 closed 22.50 points, or 1.1%, lower at 2,079.65, booking a 2.2% weekly loss. The weekly decline for the benchmark is the steepest since March. The Nasdaq Composite dropped 57.78 points, or 1.1%, to 5,088.63, ending the week with a 2.3% weekly loss. The tech-heavy index retreated from its record closing level set on Monday. The Dow Jones Industrial Average dropped 163.39 points, or 0.9%, to 17,568.53, recording a 2.9% weekly loss.

global exchanges

Currency Markets

The dollar looks set to finish the week broadly lower on Friday after several sessions of range-bound trading as traders held off on taking large bets in the currency market ahead of a meeting of Federal Reserve policy makers next week. The U.S. dollar a measure of the dollar’s strength against a basket of six rival currencies has fallen 0.7% since the beginning of the week to 97.3110.

The buck shed 0.2% of its value against the yen this week. It recently traded at ¥123.78. Meanwhile, the euro gained 1.4% against the dollar, trading at $1.0974. The pound slipped 0.6% this week to $1.5507.

On Friday, the dollar pulled back against the yen, but pushed higher against the euro and the pound, after official data showed new-home sales dropped 6.8% in June, the weakest reading in seven months. There was little market-moving data this week to move the dollar.

global currencies weekend

Commodity Markets

A selloff in commodities like crude oil, which recorded a 5% weekly loss, supported the dollar against the Australian and Canadian dollars. On Friday, the Aussie fell to a six-year low at 72.59 cents, while the loonie fell to 76.31 cents, its lowest level since 2004. Expectations the Federal Reserve will move later this year to raise rates, potentially leading to more strength for the U.S. dollar, gets much of the blame. Most commodities are priced in dollars, making them more expensive to users of other currencies as the greenback strengthens.

Posted on 24th July 2015 by barry norman in Stockpair Daily Insight

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US Unemployment Claims At Record Lows

July 24, 2015

Barry Norman

janet_yellen_federalreserve_mgnNext week, the Fed will reconvene for its six‐weekly FOMC meeting. In June, the FOMC recognized that the recovery strengthened, but suggested it was not yet ready for a lift‐off. We believe that a rate hike is unlikely this month, but the Fed might keep the door open for a move at its next meeting, in September. As labor market developments are crucial in the Fed’s decision on when to act.

After a very strong May jobs report, payroll growth slowed again somewhat in June, but remains above 200 000, pointing to still a strong pace of job creation. The unemployment rate extended its downtrend, falling to a new multi‐year low of 5.3% and nearing ever closer the Fed’s target of 5.1%. It is now very likely that the Fed’s unemployment rate target will be reached in the coming months. More positive news came from a substantial decline in the broader U6 unemployment rate and the long‐term unemployed share fell sharply too, providing further evidence that the US labour market recovery is broadening. For now however, the JOLTS report remained somewhat disappointing as a further pick‐up in job openings fails to boost the hires rate. Also the participation rate remains stuck at its recent lows. The biggest disappointment came however from the wage data. After an uptick in April and May, wage growth slowed significantly in June, reversing the previous months’ improvement, but calendar effects probably depressed the data.

global currency

Today’s unemployment data might be the last piece of data the Fed’s get to look at before next week’s meeting. The number of people seeking US unemployment aid plunged last week to the lowest level in nearly 42 years. The result also reflects seasonal volatility in the data.

The Labor Department says weekly applications for unemployment benefits fell 26,000 to 255,000, the lowest level since November 1973. If the data were adjusted for the growth of the US population since then, last week’s figure would likely be an all-time low. One reason for the drop, however, is that car plants and other factories close briefly in July to prepare for next year’s models. That pushed up applications in the previous two weeks. Now that many factories have reopened, applications have fallen back.

united-states-jobless-claims

Posted on 23rd July 2015 by barry norman in Stockpair Daily Insight

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US Home Sales Help US Dollar Rally

July 23, 2015

Barry Norman

MoneyWheel forexwordsThe greenback reversed losses after its biggest fall in a month the previous session, while sterling rose in response to minutes from the Bank of England’s last meeting that suggested some policymakers support higher interest rates.

The yen held its ground against the dollar and strengthened against the euro after Bank of Japan Governor Haruhiko Kuroda on Tuesday said he expected inflation to accelerate and brushed off the idea of more monetary stimulus.

Commodity currencies, including the Australian, New Zealand and Canadian dollar, which have been hit by the dollar’s rally in the past month, were still on the back foot.

The kiwi fell 0.8 percent to $0.6576, a shade above six-year lows set last week, with focus turning to a Thursday meeting of the Reserve Bank of New Zealand that is expected to cut interest rates at least a quarter point.

currencys GBP jpy eur

The currency market has been listless this week as Greece’s debt crisis has waned and traders ponder the timing of a Federal Reserve rate increase this year, analysts said. The euro tumbled to 1.0875 after the ECB raised its credit limit to Greece as the banks began to run out of money.

Sterling briefly moved higher to trade at 1.5606 after minutes from the Bank of England’s latest policy meeting suggested that more policymakers were edging towards voting for a first interest rate hike since before the financial crisis.

Though all nine monetary policy committee members voted to keep rates at their record lows, for a number of them the risk of inflation rising above the BoE’s 2 per cent target was rising. The “very material factor” of Greece’s debt stand-off influenced their vote to keep rates on hold.

The dollar strengthened against its main rivals Wednesday after the National Association of Realtors reported that U.S. existing-home sales in June grew at the fastest pace since February 2007–just before the financial crisis rocked the market. Sales of existing homes rose 3.2% to a seasonally adjusted rate of 5.49 million homes. The US Dollar index was trading at 97.90.