Fundamental Analysis 2017.07.24 – USD, Oils and Indicies

USD saw a significant drop on Friday even though this drop wasn’t marked by any important economic event – which inevitably raises USD red-flags for investors. JPY didn’t comfort market sentiment either, which also saw a slip. USD and JPY weren’t the only major currencies to see their price dip after RBA’s Dep. Gov. Guy Debelle’s statement indicating towards a dovish monetary policy cost the AUD a few price points.
Gold and other precious metals saw a nice bump though due to the anemic USD (and general volatility). Gold in fact saw the highest price its seen in the last month. Today’s market
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The Joint Ministerial Monitoring Committee is scheduled to meet in St. Petersburg, this group is made up of ministers from 3 OPEC and 2 non-OPEC members. They will most likely review the results of their restriction of OPEC oil production, which has obviously been unsuccessful – OPEC’s June production suppressed its last year’s production in June (which didn’t have any restriction on it). Although Saudi Arabia restricted its output, it has been offset by ramped up production from other OPEC countries. A press conference is scheduled with the conclusion of the meeting but it’s exact time is TBA. It is unlikely that this meeting will result in an effective strategy to lower global oil reserves via production caps – thus effecting both oil prices and currencies correlated to oil like CAD.



Today may have negative impact on USD as Trump’s senior adviser, which is also his son-in-law, Jared Kushner will undergo an examination/interview by staff of the Senate Intelligence Committee Although there probably won’t be anything released initially leaks and rumors might effect market sentiment.

The reason for the interview is Kushner presence during a meeting between a Russian attorney Donald Trump Jr. and Paul Manafort former Trump campaign manager and according to speculation involved the Russian official divulging potentially damaging information about Trump’s fellow presidential candidate Hillary Clinton.

Given the stability of Europe (sans the UK) compared to this typhoon of scandal currently blowing through Washington – any leaks or information regarding Kushner’s interview could have adverse effects on USD.
The US and UK and beginning negotiations regarding a trans-atlantic post-Brexit trade agreement. Although the UK cannot actually enter an agreement until it actually leaves the EU, but today’s and tomorrow’s meeting can set the atmosphere and ground work for a post-EU UK. Of course the Brexit process hasn’t actually been agreed on – and if a hard exit is performed the UK will need as many trade agreements as possible to balance the loss of its bigger receiver of exports: the EU.

The Eurozone manufacturing and services PMIs are expected to slightly lower, but not significant level. In general the PMIs are high at their current levels, so a slide in the figure shouldn’t be too stark.

The US’s PMI on the other side of the Atlantic, should go up slightly, but this effect much like the EU’s negative one, shouldn’t affect markets significantly.



This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice

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