Weekly Report

Market analysis

Date: Tuesday, 19th of July 2016

Highlights:

• EUR/USD : Fell sharply after failed coup attempt on Turkey
• GBP/USD : Holds onto sharp gains after BOE leaves key rate unchanged
• USD/JPY : Set for biggest weekly drop as China data boosts risk
• USD/CAD : Moves lower after BoC hold interest rates unchanged
• Gold : Falls slightly amid surging dollar, halting 6-week winning streak
• Crude Oil : Capping volatile week as U.S. oil rigs move higher

GBP/USD

Holds onto sharp gains after BOE leaves key rate unchanged

The pound briefly rose above the 1.30 level against the dollar on Monday, boosted by prospects that Theresa May will become the next U.K. prime minster much earlier than had been anticipated. On Tuesday the pound extended gains against the dollar and the yen fell further as political uncertainty in the U.K. eased and Japan prepared fresh economic stimulus measures, boosting risk appetite. Sterling found support as investors reacted to the news that Britain’s home secretary Theresa May would soon replace David Cameron as prime minister, removing some of the political uncertainty that has hit the currency in the wake of the June 23 vote to leave the European Union. Carney also refuted allegations that the central bank attempted to scare voters about the economic risks of a Brexit vote in the run-up to the referendum, describing the allegations as “extraordinary”. On Wednesday Britain's vote to leave the European Union is raising questions about sterling's place among the small, elite group of hard currencies underpinning the financial system. For Britons, the impact may feel slight or even ambiguous. Consumers of imported goods may see them become more expensive and travelers will find foreign trips more costly. Exporters, on the other hand, may find their products more competitive abroad and any overseas earnings get a boost. The pound rose considerably on Thursday, holding onto sharp gains from earlier in the session, after the Bank of England triggered a rally in the Pound by unexpectedly leaving its benchmark interest rate steady at a closely-watched meeting. In the U.K., the Bank of England jolted markets by holding their key interest rate steady at 0.5% and leaving its comprehensive Quantitative Easing program unchanged on Thursday afternoon. Following the 8-1 vote, Bank of England governor Mark Carney hinted that the BOE could approve fresh stimulus measures when meets again on August 4.

WEEKLY REPORT

Highlights:

• EUR/USD Rose as the European Central Bank was not considering buying government debt
• GBP/USD Fall and remaining near 31-year low
• USD/JPY Gains on safe-haven demand
• USD/CAD edges down to 1-week lows in early trade
• Gold Stays near 2-year high as rally continues
• Crude Oil Inch higher as Nigeria militants claim fresh attacks

Crude Oil

Inch higher as Nigeria militants claim fresh attacks

Crude pushed higher as market players monitored more disruption to supplies from Nigeria. The Niger Delta Avengers militant group has claimed responsibility for five new attacks on Nigeria's oil infrastructure over the weekend, dealing a blow to the government’s effort to enforce a cease-fire. Signs of a potential recovery in U.S. drilling activity limited gains. According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. rose by 11 last week to 341, marking the fourth increase in five weeks. However, oil demand and, as a result, prices could come under pressure as weak margins prompt run cuts at a time when refineries in top consuming region Asia are already gearing up to enter their maintenance season.

On the New York Mercantile Exchange, WTI crude traded between $47.91 and $49.08 a barrel before closing at $49.02, up 0.69 or 1.43% on the session. On the Intercontinental Exchange (ICE), brent crude wavered between $49.26 and $50.42 a barrel, before settling at $50.39, up 0.68 or 1.37% on the day. Crude accelerated gains in the final hour to close near session highs.

WEEKLY REPORT

Market analysis

Date: Monday, 4th of July 2016

Highlights:

• EUR/USD Rose as the European Central Bank was not considering buying government debt
• GBP/USD Fall and remaining near 31-year low
• USD/JPY Gains on safe-haven demand
• USD/CAD edges down to 1-week lows in early trade
• Gold Stays near 2-year high as rally continues
• Crude Oil Inch higher as Nigeria militants claim fresh attacks

Gold

Stays near 2-year high as rally continues

Gold prices extended gains from last week in European trade, staying near the strongest level in more than two years, while silver spiked to levels not seen since July 2014. Gold jumped $16.70, or 1.27%, last week, the fifth straight weekly gain. The precious metal rose almost 9% in June, its biggest monthly increase since February. Prices are up nearly 25% so far this year, completing one of its strongest first halves on record. Gold has been well-supported in recent sessions amid fading expectations of a Federal Reserve rate hike in the next couple of months and as investors continued to digest the political and economic aftermath of the U.K.’s decision to leave the European Union. Market players all but ruled out further rate hikes by the Fed this year in the aftermath of Britain’s vote to leave the EU. In fact, futures markets are now reflecting a chance that the Fed could actually cut interest rates before the end of the year. According to the CME Fed Watch tool, there’s currently a 0% probability of a Fed rate hike in July and a 3% probability of a rate cut.The BOJ, as expected, left its benchmark interest rate unchanged despite a surging yen and sluggish inflation. Following the decision, the yen jumped against the dollar, hitting a fresh 22-month high at 103.58. Yields on the Japan 10-Year also continued its prolonged swoon, touching down to an all-time record-low of Minus-0.21%. On Friday Gold retreated from 22-month, amid heavy profit taking, as officials suspended Brexit campaigning for a second consecutive day following the tragic death of a Parliament member, throwing next week's closely-watched referendum into limbo. a series of events ahead of next week's Brexit referendum were cancelled, as U.K. residents continued to mourn Jo Cox, a Labor Party member who was shot and stabbed to death in North Yorkshire a day earlier. Cox, who was elected to the House of Commons last year, had openly campaigned for the "Remain" camp in recent weeks.