Dollar Climbs To Its Strongest Level For Nearly Two Months

Rising US government bond yields are supporting a jump for the dollar, the US currency having its best session for nearly a month. The dollar index was climbing 0.4% to its highest level since the beginning of March. Treasury yields are continuing to stand out as investors continue to sell government debt, as investors refine their outlook for global monetary policy ahead of two major central bank meetings this week.

Expectations that the Federal Reserve would raise interest rates three more times in 2018 was also supporting the greenback. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.4% to 90.44, the strongest level since March 1.

The dollar rose to more than two-month highs against the safe haven yen, with USD/JPY up 0.4% to 108.10. The euro slid to two-week lows, with EUR/USD down almost 0.5% to 1.2230. Sterling was also lower, with GBP/USD slipping 0.2% to 1.3971.

Dollar strength was pushing the euro down 0.4% to $1.2233 while the pound is off 0.3% to $1.3966. Japan’s yen is 0.5 per cent weaker at ¥108.19 per dollar.

The stronger greenback was also having an impact on commodity assets measured in the US currency. Oil prices slipped with US marker West Texas Intermediate off 0.4% to $68.11 while Brent crude was down 0.3 per cent to $73.86 a barrel.

Priced dipped on Friday after a tweet from Mr Trump calling oil prices “artificially high”.

Gold was down 0.5% to $1,328.70 an ounce after touching its lowest intraday level in two weeks earlier in the session.

This Week Ahead: Top News to Watch This Week

Fellow traders, let us have a look at upcoming week in terms of important economic news.

Below you can find short table of major economic news during this week. The week is really busy with releases of quarter reports by almost all major companies from Tech industry, so traders in CFD on stocks should be really watching closely on the developments of their respective asset class.

Monday: Google parent Alphabet (NASDAQ:GOOGL) is expected by analysts on average to report a 22% increase in revenue to $30.3 billion, with net income rising 21%, equivalent to $9.28 per share on a non-GAAP basis, according to Thomson Reuters data. Flash April PMI surveys on manufacturing and service sector activity expected too.

Tuesday:  April German business sentiment from the IFO will be published on Tuesday. United States: Earnings will be the focal point most of the week as all sectors of the S&P will be well represented from key companies. With almost one-fifth of the S&P having reported, 79% have beaten estimates. News infuencing USD movements: March existing home sales should rise 0.7% to a 5.580 mln rate, following a strong 3.0% gain in February to 5.540 mln. New home sales are also expected to rise to 0.630 mln in April from 0.618 mln in February.

Wednesday: U.S. Tech companies will start their highlight busy week of earnings reports on Wednesday. Facebook (NASDAQ:FB) is expected to report a 42% surge in quarterly revenue, to $11.4 billion. Its stock has lost 10% since the revelations about Cambridge, underscoring investors’ concerns about regulation that could crimp the leading social network’s profitability. Among reports investors should be closely looking at Twitter (NYSE:TWTR), Qualcomm (NASDAQ:QCOM), eBay (NASDAQ:EBAY) and PayPal (NASDAQ:PYPL).

Thursday: Amazon (NASDAQ:AMZN) late on Thursday is expected to report a 40% jump in revenue to $50 billion as the online retailer continues its expansion into cloud computing and brick-and-mortar groceries. Also expected to report are: Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) and Baidu (NASDAQ:BIDU). Among non-tech reporting companies are: Boeing (NYSE:BA), Caterpillar (NYSE:CAT), 3M (NYSE:MMM), United Technologies (NYSE:UTX), Verizon (NYSE:VZ), AT&T (NYSE:T), Comcast (NASDAQ:CMCSA), Visa (NYSE:V), Ford (NYSE:F), General Motors (NYSE:GM), UPS (NYSE:UPS), Starbucks (NASDAQ:SBUX) and ExxonMobil (NYSE:XOM).

Friday: BOJ Policy Announcement with expectations to keep a pledge to maintain a short-term interest rates at minus 0.1%. Friday we also expect U.S. Advanced First Quarter GDP and UK Preliminary Q1 GDP

 

GBP/USD drops as BoE governor dampens rate hike expectations

The pound moved lower against the dollar on Friday after Bank of England governor Mark Carney hinted that market expectations for a rate hike in May could be overblown.
Late Thursday, Carney told BBC that while markets could expect gradual rate hikes in the coming years, he didn’t want “to get too focused on the precise timing. The BoE chief pointed to weak business surveys and retail sales as some of the softer data. “I am sure there will be some differences of view but it is a view we will take in early May, conscious that there are other meetings over the course of this year,” he said in the interview.

GBP/USD was last off 0.09% at 1.4073, after having hit an intraday low of 1.4036. The EUR/GBP is now set to challenge its highest levels for April as the euro holds firm in the face of general dollar selling. The GBP/JPY slightly higher today though in line with other yen pairs. Strong data has helped the US dollar rally for the last four days, topped by yesterday’s better than expected Philly Fed Manufacturing Index.

The pound wasn’t the only currency in the dollar’s firing lines yesterday. The AUD/USD slumped, while the NZD/USD is down another 0.5% this morning. The Kiwi is now down over 1.5% on the week.

The yen pairs are generally on the front foot this morning, making minor gains, though the damage has been done.

Actually, EUR has held up well recently, while its close neighbours the pound and Swiss franc struggle. The trend is firmly with the latter and this could point to further upside from here.

Oil climbs towards $75 a barrel to reach highest point since 2014

Oil prices climbed towards $75 a barrel on Thursday, hitting the highest level since 2014 and taking the rally over the past year to almost 50%, with traders pointing to tightening supplies at a time when political risks to the market are mounting. The rise in price, which has spurred a sharp rally in energy shares, follows 16 months of supply cuts by Opec and Russia that have removed at least 1.8m barrels a day from the market. Prices were slightly softer in early Asian trading on Friday.

But in recent months the supply cuts have mopped up the worst of the oil glut that hammered prices four years ago, with Saudi Arabia, Opec’s de facto leader, showing little sign of moving to cool the rally as it tries to fund an ambitious — and expensive — programme of economic and social reform. The latest surge over the past two weeks, however, has largely reflected rising political risk, traders say.

Tighter supplies in the market increase the importance of production threats, ranging from Venezuela’s economic collapse to the risk of the US reimposing sanctions on Iran’s oil exports. Brent, the international benchmark, touched $74.75 a barrel on Thursday, having gained 10 per cent since the start of this month. Prices eased in late US trading and on Friday morning in Asia Brent was at $73.83.

Saudi Arabia’s energy minister said on Friday that the world economy had the “capacity” to absorb higher prices, the day after crude hit the highest level since 2014.

Khalid al-Falih, who has led Opec’s 1.8m barrel a day supply reduction deal with Russia, said that while the kingdom was not targeting a specific price, it had little fear current levels above $70 a barrel would cut into rising consumption.

“I have not seen any impact on demand with current prices. We have seen prices significantly higher in the past, twice as much as where we are today,” Mr Falih said before the start of a technical meeting in Jeddah to review the impact of the cuts.

GBP Remains Under Pressure Due to UK Inflation Data

Today, the British pound remains under pressure, following two days of heavy selling. Pound bulls came in for a shock yesterday as UK inflation data came in well below estimates. CPI, RPI, PPI and HPI all came in below estimates, putting paid to previous expectations for an early Bank of England rate hike. The GBP/USD is now down on the week, as is the GBP/JPY, while the EUR/GBP has reversed higher.

The dollar index is flat this morning after climbing yesterday. Dollar pairs have been mixed, with the AUD/USD making gains for the last two days, while the NZD/USD has fallen flat for three days by contrast.

The euro has held firm despite the pound’s travails, with the EUR/JPY making gains since yesterday.

The USD/CAD rose yesterday after the BOC opted to keep rates on hold. The Canadian dollar is generally weaker after officials provided a more mixed message than expected.

Silver surged yesterday, while gold held ground.

The yen remains range bound, with the USD/JPY making gains since yesterday.

Hot topic

Energy stocks are higher after a fall in US supp lies sparked a rally in oil prices while easing concern about the international trade dispute helped to support wider sentiment.

Brent crude oil is up 1.5% to $74.61 a barrel, crossing $74 for the first time in four years. The milestone came after a gain of almost 3% over the previous session following news of the 1.1m barrels drawdown in US crude stocks. Analysts are also expecting Opec to reinforce supply limits when the oil exporters’ group meets next week.

US West Texas Intermediate is up 1.4% at $69.41 after it too touched its highest level since 2014, when oil crashed from above $100 a barrel to below $30 after a glut in US shale supplies spooked the market.

 

Oil Hits Fresh 3.5-year High Across the Global Markets

In short: Oil at four-year high as Saudis eye supply constraints and US inventories fall. Energy, resources stocks gain across Asia, Europe set to follow. Hong Kong dollar jumps on HKMA comments as macro back in focus as trade tension eases.

Energy stocks are higher after a fall in US supplies sparked a rally in oil prices, while easing concern about the international trade dispute helps support wider sentiment.

Brent crude oil is up 0.5% at $73.84 a barrel, crossing $74 for the first time in four years. The milestone came after a gain of almost 3% over the previous session following news of the 1.1m barrels drawdown in US crude stocks. Analysts are also expecting Opec to reinforce supply limits when the oil exporter’s group meets next week.

US West Texas Intermediate is up by 0.4% at $68.74 after it too touched its highest level since 2014, when oil crashed from above $100 a barrel to below $30 after a glut in US shale supplies spooked the market.

The energy segment was one of the best performers in Tokyo, helping the Topix index to hold steady. Hong Kong’s Hang Seng is up 1.3%. The CSI 300 of major Shanghai and Shenzhen companies is up 1 per cent and the Kospi Composite in Seoul gained 0.3 per cent.

US commercial oil inventories dropped by 1.1 million barrels in the week through April 13, according to the US Energy Information Administration (EIA). Meanwhile, gasoline stocks fell by 3 million barrels and distillate fuels, including diesel, declined by 3.1 million barrels.

Also, the involvement of Russia and Iran (two of the biggest oil producers) in the Syrian crisis and the fears of supply disruptions seem to have played a major role in boosting oil prices in recent weeks.

What’s more, the rumors are doing the rounds that Saudi Arabia is hoping to push oil prices to $80, so the valuation of Saudi Aramco improves. Further, the OPEC output cuts deal compliance rate hit a new record high of 164% in March. So, it appears, there is no stopping the oil rally, at least in the short-run.