EU GDP, US Industrial Production, Cisco and Alibaba Earnings
The US dollar recovered from the losses over the past days and the US Dollar Index (USDX), which measures the performance of the dollar against six other major currencies closed around the level seen at the start of last week. Besides the strong dollar, concerns the uncertain terms of the Brexit could have pushed the GBP/USD pair yet again lower, while fundamentals were mixed, with the unemployment rate in the UK falling to 3.8%, while average earnings growth at 3.2% lagged behind expectations.
After the spike on Monday, which temporarily lifted the price of a troy ounce of gold above $1,300 as the trade conflict between the US and China further escalated, prices started coming down over the next trading sessions. Silver prices however remain stable firmly below $14.9 and relatively unmoved by the recent developments.
Oil moved marginally higher on Tuesday, while a further uptick could have been prevented following data from the API, which showed that crude oil stockpiles increased by 8.6 million barrels over the course of the past week.
Equity markets strongly recovered, and a further recovery was seen in US futures by Wednesday morning. However Asian and European markets were trading again mixed by Monday morning. Despite the increasing regional tensions, Saudi Arabian stocks ended the series of losses and moved strongly higher in the early hours on Wednesday
For Wednesday GDP data from Europe, CPI statistics from Canada and retail sales and industrial production figures from the United States are expected to be released.
As stock markets recovered from the biggest daily loss in more than four months, the EUR/USD pair moved again lower towards the 1.12 mark.
German gross domestic product (GDP) data with growth of only 0.6% y/y in the first quarter was slightly below expectations and also below the previous quarter with 0.9% growth reported. Many are now concerned about the slow growth of the German economy, which is in term of size the biggest in Europe. French inflation was reported marginally above expectations at +1.3% y/y (expected +1.2%).
On Wednesday from Europe quarterly data on employment change and is expected. Key data today from the US will be the industrial production and business inventories. Also officials from both the FOMC and the ECB are expected to deliver speeches over the course of the day.
Bitcoin prices reached a new year-to-date high on Tuesday morning, but were unable to move higher beyond the $8,300 level. However the retracement at night below $7,700 was only short-lived as the token reached again a value around $8,000 per token by Wednesday morning.
Other cryptocurrencies are catching up as well, with both Ethereum and Ripple gaining around ten percent compared to the previous day, while Bitcoin’s performance was flat.
Multiple explanations are given for the recent rise in prices in the cryptocurrency market that saw the overall market capitalization again surpass $200 billion. One factor is the rising engagement by institutional investors. Also, the upcoming events Blockchain Week and Consensus 2019 could draw more publicity as well as new comments from key figures about the market.
While oil prices managed to end the trading session on Tuesday higher, the gains were somewhat limited after the American Petroleum Institute (API) reported that the weekly crude oil stockpiles increase by 8.6 million barrels. This is the highest weekly increase in inventories according to API data in this year.
While concerns over the trade conflict between the US and China and the subsequent reduced possible outlook on global growth could also affect oil prices, the volatile situation around the Arabian Peninsula could also have impact on market prices. After on Monday morning acts of ‘sabotage’ against commercial ships off the coast of the UAE were reported, now Saudi Arabia reports that two of its oil pipelines were attacked by drones carrying explosive. Saudi Arabia, the UAE and other Arab countries are engaged in what is referred to as a proxy war in Yemen, with the main adversary there reportedly backed by their arch-nemesis Iran.
On Wednesday weekly inventory data on crude oil, gasoline and distillate stockpiles from the Energy Information Administration (EIA) is expected.
Stock markets moved clearly higher on Tuesday, recovering around half of the losses from Monday, when the further escalating trade conflict between the US and China pushed global markets lower. While different estimates are made how much in terms of GDP growth the tariffs and counter-tariffs by China would hit the US economy, analysts seemed less concerned about the fall-out on Tuesday. US President Trump now even mentioned an idea to bail out farmers who will be hit by tariffs that China put on US exports as a reciprocal measure.
Just as chip stocks (US Semiconductors ETF +2.53%) and banks (US Banks ETF +1.61%) were among the biggest loser on Monday, they also rebounded the strongest on Tuesday.
Stocks that had their IPO recently this year, like Pinterest (+7.65%), Beyond Meat (+15.20%) or Uber (+7.57%) were among some of the more volatility prone equities over the past trading sessions.
More earnings releases are expected this week from companies like Cisco and Alibaba on Wednesday and Walmart and Nvidia on Thursday.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results.
For the full disclaimer click here.