European GDP, US Retail Sales and Industrial Production
While the EUR/USD pair declined to the lowest level since April 2017, many other currencies, including the pound sterling (GBP) managed to improve against the greenback, with the GBP/USD pair trading again above 1.30. In emerging markets the dollar also did not manage to make any significant headway with the USD/CNH pair remaining clearly below 7.0, while emerging market currencies including the Mexican peso (MXN) and South African rand (ZAR) continued to improve.
Most precious metals managed to advance higher on Thursday, with gold reaching a one-week high, while palladium also managed to push above $2,350 for the first time this week, recovering from the losses seen last Thursday and Friday.
While US stock indices reached new records, European markets were unable to match that positive sentiment, with a small retracement seen on Thursday in indices like the Germany 30 or Europe 50 and only marginal improvement by Friday morning.
After the weak German GDP numbers added to concerns about health of the economy in Europe, more data will be released in the morning hours, including the Italian and EU trade balance as well as the EU GDP for the fourth quarter last year, where analysts hope to maintain the one percent growth reported in the previous quarter.
From the US data on retail sales, import/export prices, industrial production, capacity utilization, business inventories and consumer sentiment can be expected.
The EUR/USD pair continued to decline by Friday morning with the pair on track for the highest losses in two consecutive weeks seen in more than a year. The weak growth of Europe’s biggest economy – Germany, did not help raise the sentiment for the common currency, as GDP growth was at only 0.6% annually with economists concerned about the stagnating economy given weaker consumer an public spending in the fourth quarter of 2019.
In the US on the other hand inflation continued to increase at a higher pace than anticipated with 2.5% consumer price inflation being reported for January.
More data can be expected on Friday afternoon, including retail sales, industrial production, consumer sentiment and business inventory statistics.
European indices were unable to follow the bullish trend in the US over the past days and have been trading again lower after the all-time high reached on Wednesday. This comes even despite the fall of the EUR/USD to a new 2-1/2 year low which in theory would favour European exporters, given the weakness of the common European currency.
Renault shares opened with a sizable downside as the company set its profit goal lower in the quarterly earnings reported on Friday morning. For the first time in 10 years the company made a loss of €141 million for the whole year of 2019. The decline was attributed to charges from some of its business in Chinese joint ventures, the scandals surrounding the former Nissan’s CEO Ghosn as well as deferred tax obligations in France.
The UK pharmaceutical company AstraZeneca also opened significantly lower after the company reported operating profits falling by 29% compared to last year and also clearly missing analysts’ expectations.
Volkswagen will report today its cars delivery numbers for January and the Italian oil company ENI is due to present its quarterly results.
Oil prices closed almost unchanged at the end of the trading session on Thursday after again a significant intraday volatility could be observed as prices fell initially on the Asian trading session but then recovered in the afternoon.
The markets will be still assessing carefully what impact the ongoing COVID-19 epidemic in China could have on the oil markets as the OPEC already adjusted its demand growth projections for this year. Also the still outstanding decision from Russia whether to back further production cut-backs as supported by technical panels and other members of OPEC+ last week, might have impact on the market from the supply-side.
On Friday the weekly US Baker Hughes Oil Rig Count numbers will be released. After a strong decline in the number of operating oil rigs over the course of last year, this year the statistic showed a consolidation with consistently 675-676 oil rigs reported in operation over the past three weeks.
US stock indices continued to rise to new all-time highs despite concerns about the possible market impact of the coronavirus epidemic in China, which among other industries already significantly affected car sales in that market.
Alibaba’s (-2.10%) stock price was down despite the company positing better-than-expected results for the past quarter, as investors seem to see sizable risks for the Chinese economy, despite Alibaba’s assurance that it is positioned to accelerate digital transformation in the economy with more online grocery orders fulfilled and working to push work-from-home solutions forward.
Kraft Heinz (-7.50%) was one of the worst performing stocks in the market on Thursday as sales tumbled by 5% in the fourth quarter, which was blamed on the changes in consumer preferences away from processed foods.
On Friday companies with a listing in the US including Canopy Growth and Yandex will also publish their numbers.
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