2019-11-11 • Updated
US yields moved higher on Monday as increased geopolitical risks pushed investors to favor safe-haven assets. The US missile strikes were seen as a warning to Syria’s President Bashar al-Assad to stop using chemical weapons in the ongoing civil war. Friday’s labor report hit the markets quite hard as it showed that the economy added 98K jobs in march, the fewest since May 2016. Other important news from the past week was the agreement between the US and China to start a 100-day examination of trade issues. Trump and Xi were both upbeat after the meeting. The former one was happy to hail an “outstanding relationship” with the US major competitor – China. Chinese President was happy to get deeply acquainted and to establish close ties with the American leader. So, this makes us believe that Trump would abstain from applying harsh epithets to China’s currency manipulations and that US-China relationship will be more or less stable for a while.
EUR/USD has started the week on a joyful note having rebounded from its Friday’s low at 1.0578. But the single currency remains to be a subject to downside risks ahead of the first round of the French presidential election. The next key level to the downside can be found at 1.0490 (February low). It will be acting as a quite sturdy support. A move above 1.0665 would be a sign that the immediate downward pressure has eased. Today, we would recommend you to set an alarm clock for 11:10 pm MT time as at this time Fed’s Chair Yellen will be speaking at the University of Michigan and answering the audience questions.
USD/JPY was a gainer in Tokyo morning. It rose above 111.50 as global market stabilized after the US missile attacks on Syria and Trump’s meeting Xi ran smoothly. The quotes may rise higher at least to 112.20 (March 31 high). On the downside, there is a solid support at 110.60.
USD/CAD rose to 1.3412 in the past session having pared its Friday’s losses. Loonie has strengthened significantly on the surge of the oil prices in the course of the past week. Brent oil futures were rallying since the beginning of April due to the talks about extension of output cut deal. Russia energy minister Novak has discussed the possible extension of the deal on Friday. But we will receive more clarifications on whether the deal can be extended or not by the end of April or in the beginning of May ahead of the 172th OPEC meeting.
GBP/USD got a positive momentum on Monday after having slid to 1.2360 at the end of the past week. The pound has some chances for recovery in the near-term if the upcoming UK CPI figures and labor market data beat market’s expectations. Today’s economic calendar for the pair is light.
Aussie suffered significant losses in the course of the past week having dropped to 0.7490. Only a move back to 0.7550 would indicate that immediate downward pressure has eased. The sudden weakness of Aussie can be explained by the tremendous downfall of iron ore and copper prices. Friday was the worst day for iron ore in over a year, as the price of benchmark 62% fines declined by 6.76% to $75.45 per ton.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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