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- Varchev Finance: Trading day in one post: 05.02.2018
Varchev Finance: Trading day in one post: 05.02.2018
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Loading...Asian stock market: Asian markets started the week big declines. Japan's Nikkei reported a 2.34% drop, Topix 2.12%. Australian ASX lost 100 points of its value (or 1.65%), with all sectors in red. The financial sector in the country fell by 1.44%, the energy sector by 2.68% and the raw materials sector by 2.22%. Chinese markets also fell. Hang Seng dropped 1.67%, Shanghai composite by 0.19%, and Shenzhen composite wiped 0.77% of its value.
FX market: USD remains among the weakest currencies on the market. Although the FED will most likely raise interest rates 3 times in 2018, the greenback is failing to attract enough investors. However, if one of the FOMC members is positive about more than 3 interest rates, we are likely to see a strong dollar momentum. The market is now priced in the 3 increases and therefore they do not affect so much on the strength of the currency. Last week we saw NFP data and hourly pay in the United States. Data was above expectations, which in the short term supported the dollar, but quickly erased its profits. We remain negative at USD and will be looking for a appropriate correction to enter short position. CAD: The Canadian dollar on the other hand remains strong. If the country's economic data continues to exceed analysts' expectations, it is very likely that we will see a 2nd increase in interest rates this year. Another reason for the strength of the currency is the high price of black gold. The correlation between the two instruments is strong and while OPEC's OIL mining agreement remains in force, we can conclude that CAD will enjoy investor support. We remain positive toward the Canadian dollar. AUD and NZD remain at low levels. Bulls in the market choose not to invest in AUD and NZD, although risky assets are currently in vogue. Why? Bearing in mind that the interest rate in Australia is 1.5%, and in New Zealand 1.75%, there is no reason why investors pour money into their economies, as the interest rate in the world's largest and most secure economy, the US, is 1.5 % (soon 1.75%), Canada 1.5%. Market participants prefer investing in safer and more stable economies, with returns being roughly the same.
Commodities market: Following the better US data for NFP, GOLD reported a significant decline. The precious metal is currently traded at about $1330, down from a peak of $1364 earlier this year. At present, the trend of precious metal remains bullish and short positions are quite risky. If the US economic data continues to be above expectations, even if we do not have a dollar increase, the market will trade the rising inflation in the country, and inflation and GOLD are in a reversed correlation. OIL: The price of oil futures indicates that the price of black gold was down on the first day of the week. WTI is down 66 cents to $64.79 a barrel, while Brent trades with a 75 cents decline to $67.83 a barrel. For the moment, oil sentiment remains positive. The OPEC Agreement remains in force and there are no plans to stop/change soon. We remain positive with OIL.
The European stock market: European indices will open deep into a negative zone. The German DAX will open about 70 points down to 12640 euros. The French CAC with a 22 point drop in the price of 5305 euros and the UKX UK with a 30 point drop in the price and will open at around 7365 pounds. The fall in indices deepens. Although we can not call last week's "healthy correction" we still have to account for it. We will look for signals for this is just a chance investors to buy at lower levels or is the beginning of a 10-15% correction.
American Stock Market: The market has finally realized that the Fed will raise interest rates at least three times this year. This is what experts give as a reason for the decline in US benchmarks. For the time being, there is no need for big worries. Still, a 2.5% drop does not mean a 15% correction will happen. We need to be careful and watch for reversal not the short-term trend again in the upward direction. US sentiment remains positive.
Economic calendar for the European and American trade sessions 05.02.2018
10:50 France - Services PMI
10:55 Germany - Services PMI
11:00 EU - Services PMI
11:30 UK - Services PMI
11:30 EU - Sentix investor confidence
12:00 EU - Retail sales
16:45 USA - Services PMI
17:00 USA - ISM Services PMI
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