|Asset||Current Value||Weekly Change|
|WTI Crude Oil||44.28||-4.10%|
Stock Weakness Continues as Yields Rise Across the Board
European stocks and the NASDAQ led the markets lower for the second week in a row, as the European Central Bank’s alleged shift towards monetary tightening continued to influence global trends. Yields were rallying hard throughout the developed world, and with the returning strength of the Europe, it delivered a double blow to European equities. Friday’s session was a much-welcomed relief for bulls, as the good, but not too good US employment report kept up hopes of further moderate economic growth alongside a cautious Federal Reserve.
EUR/USD, 4-hour Chart Analysis
That said, the DAX, the Euro Stoxx 50 and the NASDAQ are all looking wounded short-term, although the S&P 500 is holding up well thanks to the financial sector which is being helped by rising yields. The deadline of the Qatar ultimatum could have been a defining event of the week, but with the help of the US and other Western powers, the Saudi-led alliance backed off a little and let the country pass with its less than satisfying response to the 13 demands. While the diplomatic blockade is set to continue against the Gulf-state, further escalation is averted, for now.
Oil on Rollercoaster Ride while Gold Slammed
Crude oil staged a relief rally thanks to the peaceful “resolution”, and it was also helped by last week’s somewhat encouraging US supply report, but the hopes regarding the latter was crashed this Friday, as output surged once again, as the shale industry is still showing resilience to low prices and rising yields. The de-escalation hurt gold, and the Yen as well, despite the Dollar weakness, as the ECB’s hawkish rhetoric convinced investors that, in fact, we are in a global monetary tightening cycle.
WTI Crude Oil 4-Hour Chart Analysis
And as it is the new norm now in the algo-led financial markets, traders saw yet another flash-crash on Friday (what is it with Friday’s anyway??), this time in silver. The precious metal was crushed in a matter of seconds, and although it recovered initially, the market remained nervous and shaky throughout the session. Both gold and silver finished the week near their lows, and although the long-term prospects are still looking good, the regular “fat finger” declines will likely keep short-term traders away for a while.
Silver, 10-Min Chart Analysis
Cryptocurrencies Decline after Quiet Week
Small-cap cryptos are taking a beating since Friday morning, with double-digit losses across the board. The continued influx of ICOs draws capital away from the already public coins for sure, while the continued correction in Bitcoin and Ethereum also weighs on the segment. The majors are still well above the correction lows, despite the deterioration this weekend, while the two most active currencies of the week, Litecoin and Dash are correcting as well. The main reason for the move lower is still the previous stellar rally, and the euphoric sentiment that needs to be reset to have a good base for the next rising cycle.
Ethereum, 4-Hour Chart Analysis
The slight uptick in US economic numbers was enough to fuel the rally in yields, as more weakness would definitely be needed in order to change the mind of the Fed regarding the rate hikes this year. The ISM Manufacturing and Services PMIs plus the Non-Farm Payrolls number all beat the consensus estimates, although Factory Orders disappointed. Europe, and especially the UK, didn’t impress, while the Canadian economy continues to be the bright spot, with employment, housing, and manufacturing all providing bullish numbers.
S&P 500, 4-hour Chart Analysis
The most important US index has been showing relative strength compared to the NASDAQ this week and it remains well inside its rising long-term trend. The benchmark is hovering around the 2420 value area since the end of May, and it hasn’t left a 2% range for almost two months. The picture would only change with a break below 2400, and the next week could be crucial for the market, as the bearish tilt of the NASDAQ takes on the strength of the S&P and the financial sector.
Key Economic Releases of the Week
|Monday||JAPAN||Tankan Manufactring Index||17||15||12|
|Monday||JAPAN||Tankan Services Index||23||24||20|
|Monday||CHINA||Caixin Manufacturing PMI||50.4||49.9||49.6|
|Monday||US||ISM Manufacturing PMI||57.8||55||54.9|
|Monday||US||Vehicle Sales||–||–||16.7 mill|
|Tuesday||AUSTRALIA||RBA Rate Decision||1.50%||1.50%||1.50%|
|Wednesday||US||FOMC Meeting Minutes||–||–||–|
|Thursday||AUSTRALIA||Trade Balance||2.47 bill||1.11 bill||0.56 bill|
|Thursday||EUROZONE||Monetary Meeting Accounts||–||–||–|
|Thursday||US||ADP Employment Change||158,000||181,000||253,000|
|Thursday||CANADA||Trade Balance||-1.1 bill||-0.5 bill||-0.4 bill|
|Thursday||US||Initial Jobless Claims||248,000||245,000||244,000|
|Thursday||US||ISM Non-Manufacturing PMI||57.4||56.6||56.9|
|Friday||UK||Current Account||-16.9 bill||-16.5 bill||-12.1 bill|
|Friday||US||FED Monetary Policy Report||–||–||–|
Feutred image fromm Shutterstock