15
Mar
15
Mar

EU and Italian Inflation, US Business Conditions and Industrial Production

While the US dollar stabilized against many currencies like the euro or the pound sterling (GBP), some emerging market currencies continued with their comeback. Most notably the Indian rupee (INR) was at the strongest level against the dollar since August last year. One factor reportedly favoring the rupee in the eyes of investors is the rising popularity of the currently ruling party ahead of the upcoming national elections.

Oil prices again picked up with analysts mentioning the ongoing OPEC+ production cuts working to shrink supplies in the market, while Chinese refineries increased crude oil consumption during the first two months of the year.

Precious metals like gold or silver had a volatile trading session on Thursday but quickly recovered their losses by Friday morning, as gold was again up above the $1,300 level.

After a mixed trading session on Thursday index futures opened again mostly unchanged at the start of the European trading session. However particularly Asian indices such as those from China or Japan moved higher on Friday morning. The Volatility Index VIX on S&P 500 options was seen again lower at the lowest level since the market turmoil started in October 2018.

For Friday the European and Italian CPI data is expected. From the US data on industrial production, capacity utilization, business conditions and consumer sentiment is expected. From Canada data on manufacturing sales for January is due to come in.

EUR/USD

The EUR/USD was again unable to push higher and stuck below the 1.134 mark for the second day in a row. While French consumer price index (CPI) data was as expect at +1.3% y/y, German inflation fell to +1.5% y/y below expectations. In the US import and export price inflation was above expectations up at +0.6% m/m in February.

Meanwhile the Bank of France reduced its growth forecasted for this year but sounded confident that France would be still resilient through the weakness of the currency union.

For Friday the European and Italian CPI data is expected. From the US data on industrial production, capacity utilization, business conditions and consumer sentiment is expected.

The EUR/USD chart

Gold

Precious had a volatile trading day on Tuesday. However gold prices ended the fall around mid-day and moved again higher in the early hours of March 15. It is not entirely clear if political developments, such as the decision by the UK Parliament to postpone Brexit could have impacted gold as it is sometimes seen as a ‘safe haven’ asset affected by political uncertainty.

While silver and platinum moved to some extent correlated with gold, prices for palladium pushed clearly higher by Friday morning again above the $1,500 mark closer to the high seen at the end of February. Recently Fiat Chrysler was forced to recall over 862 thousand vehicles where also catalytic converters, which oftentimes need palladium as a component, will require replacement. Some analysts are concluding that this development among other factors could drive the deficit for the precious metal higher.

The Gold chart

WTI Oil

Oil prices moved again higher on Thursday to a new high since November 2018. Recently analysts from Barclays claimed that the ongoing production cuts by OPEC and its partners like Russia, better known as ‘OPEC+’ have pushed the oil markets in a supply deficit situation. Chinese refineries meanwhile are reported to be processing record amounts of crude oil with a total of 102.5 million tons process in the first two months of 2019.

It was reported that members behind the OPEC cartel are warning the US about implementing an antitrust legislation also called ‘NOPEC’, which would allow lawsuits against the cartel. By effectively abandoning the production quotas OPEC members are said to produce then at maximum capacity and with falling prices effectively shut down the US shale oil industry, which can only produce profitably given a stable price level.

On Friday the weekly US Baker Hughes Oil Rig Count will be released. Last week the statistic indicating the number of operating oil rigs in the US fell to a ten months low of 834 oil rigs.

The WTI Oil chart

US 500

US equity indices closed lower on Thursday with some downside moves seen in the late trading session.

Shares of the chip maker Broadcom pushed almost five percent higher in after-hours trading after the company reported better-than-expected earnings thanks to cost cuts and indicated that it sees demand picking up later this year.

Snap (+11.88%), the maker of the social media mobile app ‘Snapchat’ was one of the best performing shares in the market reaching a new five months high and now up by 132% since its low in December. The move was attributed to some analysts improving their outlook for the stock.

Some companies are yet to report their Q4 earnings for last year. As such companies like Tilray on Monday, FedEx on Tuesday and Micron on Wednesday are due to release their financial numbers.

The US 500 chart

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