Forex
The single currency reported another week of lows against the dollar, losing over 180 pips. The European Central Bank left its interest unchanged at 0.5% in a bid to reassure investors’ fears of a new economic crisis on the continent. He also stated firmly that the interest rate will be kept at this or lower level for an extended period, and did not rule out a negative interest rate on bank deposits at the ECB. President Mario Draghi said the bank will do everything possible to strengthen the European economy. His statement failed to support the euro whose losses were reinforced by the political crises in Portugal and Greece. At the end of the last trading day, the most traded currency pair, EUR/USD, closed at $1.2828.
Meanwhile, the Bank of England announced that it has no intention to raise interest rates any time soon. This derailed the currency speculators who expected signs of increasing interest rates by the bank, and the GBP/USD lost over 150 pips in just a few minutes. The weekly drop of the pair reached 300 pips, closing at 1.4899 on Friday.
Positive data from the US Labor Department helped the dollar rise against other leading currencies. The greenback improved its positions against the yen and the USD/JPY closed at 101.20, or registering a 202 pips rise. The dollar surpassed its Australian counterpart as well and the AUD/USD closed at 0.9058, or 83 pips lower than a week earlier.
Indices
The upbeat employment data from the US prevailed over investors’ fears for an earlier tapering of the Fed’s stimulus measures and Wall Street recorded gains of about 1.5%. The S&P500 increased by 16.48 points, or 1% to 1,631.89, the Dow rose by 147.29 points, or 1% to 15,135.84, while the Nasdaq climbed by 35.71 points, or1%, to 3,479.38 points.
On the UK’s economic scene, the FTSE100 rose by 3.37%, with the last quote on Friday being 6,428 points, as the Bank of England kept its interest rate at a record low (at 0.5%) and left its bond-purchasing programme of 375 billion pounds?.
Other leading European indices also found an upstream movement and only the German DAX30 reported a negative weekly performance of -1.1%. Japan’s Nikkei225 also rose by the impressive 5.39% for the week, as support for most Japanese shares proved to be the good news from the US along with the depreciation of the yen.
Commodities
On the commodities market, trading in American oil futures (WTI0813) was rather bustling, which led to a rise in its price. The so called ‘black gold’ recorded a sharp increase of almost 7% and at the end of the session stopped at $103.18 a barrel. Gold and silver, on the other hand, lost 0.93% and 3.90%, respectively, of its value.
What to expect this week?
The new week is full of interesting economic news and data, and Monday starts rather busier than last week, kicking off with a Eurogroup meeting led by ECB President Mario Draghi and his speech later in the day. More data will come from Germany’s Industrial Production, the US Consumer Credit Change for May and the UK’s Housing Price Balance for June. Tuesday’s highlights are mainly from the UK as the country will reveal its Industrial and Manufacturing Productions, both for May, along with its Trade Balance and the estimate of GDP growth for the last 3 months. Wednesday will see the release of Australia’s Westpac Consumer Confidence, Germany’s Consumer Price Index and the FOMC minutes from their last meeting. Thursday will focus on Australia’s employment data, the Bank of Japan’s interest rate decision and the US initial Job claims. On Friday, attention will be focussed on Australia’s Home Loans, the Eurozone Industrial production and the University of Michigan Consumer Sentiment Index for July.
Other than the economic calendar, more action will come from the US ‘Earnings Season”, with investors, traders and analysts highly anticipating the quarterly results by thousands of companies. Some experts have already expressed their low expectations of this quarterly season, compared to Q1 2013, as many corporations have scaled back their earnings forecasts in the previous months.
Leading firms that are due to announce their financial statements this week include: Alcoa (AA) on Monday, after the end of the session, and JP Morgan (JPM) and Wells Fargo & Co (WFC) on Friday, before the stock market’s opening bell.
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