UK GDP and Trade Balance, Aurora Cannabis Earnings
The US dollar further extended its gains against other major currencies by Monday morning, with the US Dollar Index (USDX) reaching its highest level since early January.
Gold prices were seen lower on Monday, which was attributed in part to an again stronger dollar, however concerns about economic developments while the US-China trade conflict is unresolved could have impact on demand for assets perceived to be “safe havens”. On a weekly basis oil closed significantly lower. On Friday the US Baker Hughes Oil Rig Count indicated an uptick in producing oil rigs, with now 854 in operation.
Stock indices closed mixed on Friday, with some marginal gains seen in US indices, while European indices closed overall lower. Indices futures opened mostly higher in Europe and the US, while some minor downside was seen in Asian indices. After the recent spike the Volatility Index – VIX fell again on Friday and was close to a multi-month low by Monday morning.
Cryptocurrencies including Bitcoin, Ethereum and others sharply increased in value on Friday afternoon. After weeks of relatively low volatility analysts struggled to explained this recent development.
On Monday the UK will release its trade balance, industrial production and GDP data. In the Asian-Pacific trading session on Tuesday New Zealand will publish its retail sales numbers and Australia data on home loans and business confidence.
Given the strong dollar and relatively weak fundamental data from key economies like Germany, the EUR/USD further declined on Friday, trading lower for the fifth day in a row that week.
Economic data coming in from Europe on Friday was mixed with industrial production of Italy again declining, now by -0.8% m/m in December, while the corresponding French statistic rose more than expected by 0.8% m/m (expected +0.6%).
Fundamental data from Europe of significant importance is expected later this week, with data releases such as the European industrial production on Wednesday and the German and EU GDP on Thursday. Also this week the US consumer price index (CPI) will be published on Wednesday, followed by retail sales numbers on Thursday.
After the brief recovery in the highly volatile trading session on Thursday, the pound further extended losses on Friday and Monday morning.
Despite only seven weeks left until the Brexit deadline, legislators in the UK are facing a hard time coming up with a solution to implement a future deal with the EU, with the Prime Minister Theresa May rejecting the idea from the opposition Labour party to implement a customs union with the EU. Business leaders warned that the quickly approaching deadline requires quicker action as the uncertainty can affect investments and jobs. It was reported that on Wednesday the PM will ask parliament for more time to come with a solution to the disputed backstop on the Irish island.
Fundamental data of significant importance is expected from the UK this week, such as the trade balance, industrial production and GDP numbers on Monday and consumer prices index (CPI) and producer price index (PPI) on Wednesday.
While oil prices moved marginally higher on Friday, the weekly performance was still deep in the red, with WTI oil declining by almost five percent on a weekly basis.
After the recent fall in production activity as measured with the US Baker Hughes oil rig count, the number recovered from 847 in the previous week, to 854 reported oil rigs in operation according to the report released on Friday.
Recent reports indicate that lawmakers in the United States are preparing a bill that would seek antitrust measures against OPEC members for oil market manipulation, which could allow for lawsuits against OPEC members in the US.
On Tuesday the American Petroleum Institute (API) publishes its weekly report on crude oil stockpiles in the United States. The Energy Information Administration (EIA) is the set to release its weekly inventory numbers on crude oil, gasoline and distillates on Wednesday. Also on Wednesday, the International Energy Agency (IEA) will release its monthly Oil Market Report.
US indices consolidated after the losses from Thursday and closed overall mixed on Friday. Bank (US Banks ETF -0.89%) and energy (US Energy ETF -0.59%) stocks saw some downside, while biotech (US Biotech ETF +0.50%) and utilities (US Utilities ETF +0.52%) companies traded overall higher.
Snap (+6.32%), the company behind the social media app Snapchat, further extended its gains trading beyond the high seen on Wednesday after the release of the better-than-expected quarterly results.
Electronic Arts (+16.09%) completely recovered from the slump after the disappointing earnings release earlier last week and pushed higher to a new 3-months high. One reason given for this development was the announcement on Thursday, that the game ‘Apex Legends’ reached one million players using it at the same time and 10 million within 3 days.
The earnings season continues with companies such as Aurora Cannabis publishing quarterly results on Monday, followed by Activision Blizzard, Twilio and Shopify on Tuesday and Nvidia on Thursday.
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