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Last week saw the US stock markets retreating as market participants increasingly believed that the Fed will start gradually reducing the size of its stimulus programme in September. The S&P500 lost 2.07%, closing at 1,656 points and reporting its worst week since the beginning of the year. The US30 blue-chip index was down 2.20% and ended the week at 15,081, while the technological Nasdaq100 closed at 3,073 points, or a weekly decline by 1.47%.

Despite the downward movements in the US, European indices were coloured in green, with the weekly rise mainly due to better-than-expected results of most companies on the continent. Adding to the optimism was the latest news coming from the Europe: results revealed that the Eurozone is climbing out of the recession. Analysts, however, are not calling for celebrations since the modest growth of 0.3% may signal positivism, but high unemployment figures are still a non-mover.

Germany’s DAX30 closed at 8,380 points on Friday, or a 0.33% rise for the week, France’s CAC40 ended the period at 4,114 points, or an increase by 0.7%, while the Italian S&P/MIB added 3.19% for the last five days and closed at 17,715 points.


The most interesting trade last week was again with the GBP/USD pair. The Cable continued its upward movement and added fresh 118 pips, closing at 1,5625. Other major currency pairs lacked significant movements or were in a very tight range, as the EUR/USD changed with just 11 pips on the downside and the AUD/USD fell by 8 pips.


On the commodities market, gold (XAUUSD) and silver (XAGUSD) witnessed a strong rise. Gold performed well over the past week, adding 4.56% to its value and reaching $1,373 per troy ounce. Meanwhile, silver’s closing price on Friday came at $23.17, making a rise by 13.24%. This was the largest percentage appreciation in nearly two years and some analysts even see it as the first true signs of improvement of the global economy.

What to expect this week?

Monday is offering a no-market-shaker data, putting a slow start of a rather quiet week. Tuesday’s main highlight will come from the Reserve Bank of Australia meeting minutes along with Japan’s All Industry Activity Index for June. Attention on Wednesday will be drawn to the FOMC meeting minutes which are most likely to create some serious market movements. Most of the committee members talked openly about reducing or even stopping the QE, with the latest survey of the Wall Street Journal showing that 53% of economists believe that the contraction of the stimulus programme is expected to roll in by the end of September, while 36% anticipate this to happen by the end of December. Other economic data will come from the Australia Westpac Leading Index for June and the UK’s Mortgage Approvals for the week of 16 August. Thursday’s focus will shift to Markit Manufacturing and Services PMI for Germany, France, and the Eurozone, along with the US Initial Job Claims. Friday will see the release of the GDP of the UK and Germany as well as the US New Home Sales.

Further reading:  Euro strength – how long will it last?