Canada Unemployment, US Wholesale Trade, Oil Rig Count
The US dollar further extended gains, pushing the US Dollar Index (USDX), which measures the performance of the dollar against six other major global currencies, to a new 5-weeks high. The Indian rupee (INR) opened stronger against the dollar on Friday, further extending its gains following the decision by the Reserve Bank of India to lower its lending rate by 25 basis points.
After mixed results last week, palladium continues to move higher this week, while gold prices stabilized above the $1,300 mark. Oil prices further declined over the trading session on Thursday, which was by some analysts attributed to the continued worries about global trade and growth. The strong dollar could also had implications for the precious metal, as in theory a stronger dollar makes it more expensive for non-dollar buyers, thus affecting demand and supply.
Equity indices in North America and Europe closed lower on Thursday. European markets opened mixed on Friday, while extended losses were seen in US futures.
On Friday Italy and France are due to report their industrial production (IP) levels for December. From Canada data on unemployment and housing starts is expected and from the US statistics on wholesale trade will come in.
With the continued dollar rally, the EUR/USD pair markedly declined over the course of this week.
After a lot of negative data from Germany over the past days and weeks, on Friday morning finally some positive data came in, with the trade balance surplus reported at € 19.4 bn., which is the highest value since May, with exports reported up by 1.5% compared to the previous month.
While unemployment in the United States remains close to a multi-decade low, the jobless new claims number was reported at 234 thousand above the expected 223 thousand. Consumer credit growth with $ 16.6 bn. was below expectations for December. It is assumed that positive credit growth has implications on the spending of the population and thus can have impact on sales and other associated statistics.
On Friday Italy and France are due to report their industrial production (IP) levels for December and from the US statistics on wholesale trade will come in.
The pound ended the negative series and traded higher against the relatively strong US dollar on Thursdays.
After the Bank of England (BoE) as expected left the interest rates and QE measures unchanged, the governor of the BoE mark Carney warned that the weakening global economy and the uncertainty from Brexit made the central bank to revise the growth forecast to the lowest level since the 2009 after the financial crisis, now expecting growth of only 1.2% down from the previous forecast of 1.7%.
Analysts indicate that at the current levels markets are still positive that a Brexit deal between the UK and EU will be reached avoiding the chaotic implications of a “no-deal” exit from the EU. The actual implementations of a deal however are still uncertain as EU leaders are seen as unwilling to offer concessions to the UK side and the parliament in London still needs to vote for a Brexit deal to secure the future connection to the EU bloc.
Next week in the UK data on trade balance, GDP, inflation and retail sales is expected.
WTI oil futures move deeper into negative territory on Friday, and seemed to be approaching the previous week’s lows, pulled down by worries over a global economic slowdown as well as concerns that trade disputes between the United States and China would remain unresolved after Trump said on Thursday that he did not plan to meet with the Chinese President Xi Jinping before a March 1 deadline set by the two countries.
On the other hand, prices continue to find support from Venezuela after the implementation of U.S. sanctions which analysts expect could lower market supply by 300,000 to 500,000 bpd of exports.
For Friday the release of the US Baker Hughes oil rig count is expected. The number of operating oil rigs dropped significantly over the past weeks, with the last report indicating 847 oil rigs in operation, while at the end of 2018 885 oil rigs were reported for this statistic.
After the flat results from Wednesday, US stock indices closed noticeably lower on Thursday with biotech (US Biotech ETF -2.52%) and energy sector stocks (US Energy ETF -2.21%) showing some of the weakest sector performance in the market, while utilities (US Utilities ETF +1.21%) and bank (US Banks ETF +0.97%) stocks turned up higher.
Twitter (-9.95%) plunged to a four weeks low after the social media company released its earnings for the fourth quarter. While revenue and earnings clearly surpassed investors’ expectations with earnings per share (EPS) at $0.31, investors seemed more worried about the outlook with a relatively unambitious guidance for revenue in the first quarter and also expenses estimated to rise by 20% during this year.
Expedia stocks rallied in after-hours trading, as earnings significantly surpassed expectations with an EPS at $1.24.
More earnings are expected in the coming days, such as from Aurora Cannabis on Monday and Activision Blizzard, Twilio and Shopify on Tuesday.
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