|Asset||Current Value||Weekly Change|
|WTI Crude Oil||46.33||-4.15%|
Central Bank Bonanza
The beautiful town of Sintra in Portugal was the center of the financial world for a week, as the most powerful players of the global economic field (well, that is even scarier than it sounds) gathered there to discuss monetary policies. The European Central Bank and “Super” Mario Draghi were in the forefront of the event, as the bank tried to “double-speak” the market, hinting at monetary tightening, while keeping the Euro’s reaction to a minimum.
EUR/USD, 1-hour Chart Analysis
Well, that didn’t quite work out, as you can see on the chart of the common currency above, but given the track record of the ECB in being “behind the curve” and having to change his policies very quickly, we expect a lot of flip-flopping from them in the coming years as well. For now, the market reacted in line with a tightening move; Euro up, stocks down, gold under pressure. The exception is the strong bounce in oil which was caused by the quiet Middle East situation and the effect of the higher yields on the US shale industry. The sustainability of these trends is questionable, especially gold’s bearish one, but we can definitely imagine a stronger move in the Euro as well as a deeper correction in stocks.
NASDAQ and DAX Looking Weak while Banks Turn Higher
Looking at the major stock markets, the NASDAQ is once again the weakest link, as it has been since the flash-crash two weeks ago, and that usually spells trouble for the broader market as well. Banks, especially US mega-banks, have reacted to the jump in yields in a bullish fashion, and the financial sector is testing its bull market highs near the $25 level as measured by the XLF ETF.
XLF (US Financial Sector ETF), 4-Hour Chart Analysis
The DAX and the major European stock indices were under pressure as the Euros rally pushed them lower, although the prior technical position of the segment was already quite bearish, as we noted last week. The German benchmark is now testing the support zone that we have been monitoring, and odds are good for an even deeper correction, even if the Euro’s jump won’t be long-lived.
DAX Index, 4-Hour Chart Analysis
The crypto-segment remained in a correction all week long following Monday’s scary mini-crash, which was arguably led by Ethereum. The long-term picture looks more and more neutral for the major coins, and it wouldn’t be a surprise if Monday’s lows were the final lows for the correction. The majority of the major and smaller coins are falling once again this weekend, but volatility is lower and correlations are not that strong anymore between the currencies, and Bitcoin is holding notably above the $2450 level, acting much stronger than during the past two weeks.
Bitcoin, 4-Hour Chart Analysis
The main economic indicators were mixed this week, with notable strength in Europe and a two-faced set of releases from the US. The forward-looking indicators were mostly bearish in the US, especially the Durable Goods Orders report, while the Pending Home sales number cooled down expectations regarding the housing market once again. The better than expected GDP print was accompanied by a price index downgrade, muting the effects of the positive surprise. The German IFO Business Climate Index, the Retail Sales report, and the Eurozone CPI all fueled the Euro’s rally, although the momentum of the move stalled on Friday.
Key Economic Releases of the Week
|Monday||GERMANY||IFO business Climate||115.1||114.7||114.6|
|Monday||US||Core Durable Goods Orders||0.1%||0.4%||-0.5%|
|Tuesday||UK||BOE Financial Report||–||–||–|
|Tuesday||US||CB Consumer Confidence||115.9||116.1||117.9|
|Wednesday||EUROZONE||M3 Money Supply||5.0%||5.0%||4.9%|
|Wednesday||US||Goods Trade Balance||-65.9 bill||-66.2 bill||-67.1 bill|
|Wednesday||US||Pending Home Sales||-0.8%||0.9%||-1.3%|
|Wednesday||US||Crude Oil Inventories||0.1 mill||-2.1 mill||-2.5 mill|
|Thursday||US||Final GDP||1.2%||1.2%||-67.1 bill|
|Thursday||US||Initial Jobless Claims||240,000||241,000||-1.3%|
|Friday||UK||Current Account||-16.9 bill||-16.5 bill||-12.1 bill|