Weekly Review and Outlook 22nd May 2017

Mark NugentMay 2017, Trading Plan

Weekly Forex Review – Week Commencing 15th May 2017

Economic Calendar

Over the weekend:

North Korea launches another missile on Sunday morning.

WTI crude futures surged following reports that both Russia and Saudi Arabia have agreed that oil output cuts should be extended for 9 more months which saw prices break above USD 48/bbl. Elsewhere, gold (+0.2%) prices remained amid increased geopolitical concerns following the North Korean missile test, while copper also gains amid a positive risk tone in its largest consumer China.

Russia Energy Minister Novak said that Russia and Saudi Arabia agree output cuts need to be extended for 9 months. Novak also commented that more countries are invited to the May meeting in Vienna, while Saudi Energy Minister Al-Falih stated that they recommend extending at the same terms. (Newswires)

Some OPEC members are pushing for deeper cuts or including new participants to join the cuts, including Turkmenistan & Egypt, according to sources. There were also source reports that Venezuela told other OPEC members that it wants deeper cuts of up to 5mln BPD, which didn’t gather support. (WSJ)

Sunday saw a positive Retail Sales print in New Zealand (1.5% vs 1.1%). Also on Sunday, Russia and Saudi Arabia agreed to extend oil output cuts.

Monday

Chinese Industrial Production missed (6.5% vs 7.0%).

Tuesday

Early today saw Australian Monetary Policy Meeting Minutes from May 2nd meeting state central bank judged rates are consistent with reaching sustainable growth and inflation target. The minutes stated that development in labour and housing markets warrant careful monitoring and that GDP is still expected to pick up to be slightly above 3% by H1 2018 as drag from mining investment dissipates and resource exports recover. (Newswires)

UK CPI y/y beat a high expectation (2.7% vs 2.6%). Core CPI behaved similarly. EUR Flash GDP was on target at 0.5%.

US President Trump asked ex-FBI Director Comey to close the investigation into Trump’s former National Security Adviser Michael Flynn, according to news reports citing a Comey memo. However, the White House denied this and stated that US President Trump never asked Comey to end probe of Michael Flynn, while there were also reports that the US House Oversight Committee Chaffetz Chair stated that the subpoena pen was ready for the Comey memo and demanded all related FBI documents. (NYTimes/NBC/Newswires)

Wednesday

In the UK, Average Earnings came in on target at 2.4%, which is below the current CPI of 2.7% reported on Tuesday.

Thursday

Prelim GDP in Japan beat expectation (0.5% vs 0.4%). In Australia, both Employment Change and Unemployment Rate exceeded expectations. UK Retail Sales came in at 2.3% vs 1.2% expectation and the prior number was revised up to -1.4% from -1.8%.

Friday

Canadian CPI missed (0.4% vs 0.5%) as did Core Retail Sales (-0.2% vs 0.2%).

Market Reaction

The week started with a slight risk-off tone but then went very negative on Wednesday with the widely reported Trump/Comey/Flynn shambles. The USD was down every day except Thursday. Most equity indices across the globe gapped down into Wednesday and dropped, recovering somewhat on Thursday and Friday but not closing the gap. WTI edged up and closed through resistance on Friday. Gold strengthened. The US 10 Year Treasury looks like the S&P500 – yields gapped down on Wednesday and continued down, closing the week around 0.1% nelow the open. The JPY strengthened significantly on Wednesday and over the week. The GBP ground down slowly and the EUR drove through resistance at the start of the week before consolidationg. All three commodity currencies cling to support.

Trading Plan

Trade 25 (FTSE100 long) closed at breakeven. Trade 26 (EURUSD long) closed at breakeven. Month-to-date performance is +1.91% and year-to-date performance is +9.63%.

Weekly Forex Outlook – Week Commencing 15th May 2017

Economic Calendar

Mon –

Tues –

Wed – Canadian Rate Statement; US FOMC Meeting Minutes

Thurs – UK Second Estimate GDP; OPEC Meetings

Fri – Japan Tokyo Core CPI; US Prelim GDP

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