The appreciation episode of the American dollar started last Friday with t the surprise NFP figures and it doesn’t seem to be exhausted yet. Traders’ enthusiasm may persist with the same intensity even until the end of the week and then the dollar’s evolution would guide the main trends in a more delicate manner. EURUSD is down to 1.0690 targeting the 1.0600 support level, the USCHF is right below the parity level and the Japanese yen managed to impose a correction, which leads the currency pair to the 121 local low (actual targeted resistance – 121.86).
If so far we were used to following dramatic developments in the foreign exchange sector, now we may take a look at the indices field. The US market has become visibly sensitive as the strengthening of the US dollar hinder the appetite for shares of exporters, now less profitable, and also because an interest rate rise is awaited. The S&P index is currently running to the 2000 support level while the Dow Jones index may soon fall to 17600 points. A less anticipated picture of the market comes from Great Britain, where the UK100 is rushing to overcome the January 2015 low (6673 points). The main cited reasons for this evolution is Greece, where again a financing agreement became elusive, the negative indirect effect of the price of oil on the value of local production and political uncertainty.
The instability in the Asian region is apparently having its roots in the Chinese economy where new data came up this morning. Factory production rose 6.8% in the two-month period from a year earlier while Retail sales advanced 10.7% and Fixed-asset investment increased 13.9%. The economy is in need of help, mainly more stimuli, the finance minister announced that China will pursue an expansionary fiscal policy as the authorities are monitoring the indebted local governments. How will the new Chinese economic plan shape up the Chinese and the world economy? This is I believe the main question puzzling investors for now, including myself.
WTI (Crude oil) is currently retesting the local low of 48.48 dollars per barrel, which worked pretty well for a resistance in the last 30 days. Brent’s price, on the other side, has experienced a more dramatic fall as now is being traded at 57 dollars. The spread between the two types of oil has been narrowing lately as the price of oil in the Islamic States had suffered more. In an attempt to impose its market position, Kuwait’s OPEC governor declared that the group is likely to maintain its production policy at the meeting in June. The quotations didn’t have a reaction to the news as they are trying to find a bottom of the current descending trend from where to rebound.
In short it is a new financial era we are about to enter. Or have we entered into it already?
