The test for the fed

On Thursday, the pound has exhausted its growth potential amid strong enough GDP, which pointed to the consequences of uncertainty surrounding the British referendum. Exports came in below expectations, but business investment came out weak. In addition, the number of approved mortgage requests amounted to 40.8 thousand against the forecast of 44.8 thousand He became the lowest level since March 2015, pointing out that the theme of “Brekzita” exerts massive pressure on businesses and the housing market. GBP/USDспустилась below at 1.4700, although during the day reached the level of 1,4739. However, in General, a couple even in such conditions is still in demand, indicating the likely further strengthening in the coming days. EUR/USD managed to show steady strengthening of 1.12 above, albeit briefly.

Equity markets behaved in a contradictory against the background of relatively empty economic calendar and the gradual decline in oil prices. Brent, after attempts to break 50,90$./bar., fell back below 50.00 to the closing of the trading day. In the market of precious metals gold and silver showed mixed trends: first up 0.12%, and the second eased by 0.33%.

Economic data the previous day:

  • UK: 1Q GDP +0,4% sq./sq vs 0,4% sq./sq.
  • USA: April, orders for durable goods up 3.4% against a forecast 0.5%

Forecast for Friday, may 27

The stock market

U.S. stock indexes on Friday will receive a new batch of data to digest. Given the fact that the minutes of the previous FOMC meeting and recent comments of representatives of the Committee to convince the market a fairly high chance of a rate hike at the June meeting, now every new economic report from the US will be treated with special care. Moreover, the indicators need to be really strong to convince the market that the Fed it’s time to combat the threat of inflationary pressures by limiting the monetary stimulus. If the report on US GDP today would be weaker than forecast or even just match with the expectations, this may be sufficient to stimulate demand growth in the U.S. indices. The market will start to reduce expectations for a rate hike at the June meeting, and, therefore, a longer period to stimulate the economy to create conditions for the return of the S&P 500 (ES) to district 2100.

Commodity market

Brent was able to go above the 50-dollar mark in the aggregate of two consistently received positive factors, however, as we anticipated, come nightfall, she returned below this level. For a long time, prices could not go higher only because there was no driver neither in favor of falling, nor in favor of growth. And published in succession two reports from the United States, confirmed a sharp decline in oil inventories in U.S. underground storage has become the most welcome breath of positivity. We have already advised not to get my hopes up too much about the current dynamics, since the overall balance of supply and demand remains the same, and the pace of the global economy yet do not demonstrate accelerated growth in order to provide increased interest in energy.

Besides, it is impossible to ignore the impending OPEC meeting, which, although no longer has such a large value as before, but still can cause short-term volatility in the market. Now in the rhetoric of the Saudis is obvious that to make concessions and to cut production they do not intend to, but when it will all be officially announced, Brent could again gain a foothold below 50.00, even for a few weeks. Thus, in the coming days, perhaps you will see the most attractive point to enter the market before a sales meeting.

The foreign exchange market

The ruble had the opportunity to go a little below of 65.00 against the dollar. All because of oil, which is attempting to consolidate above $ 50,000./Barr. But as we said earlier, the lack of serious long-term drivers boosting the demand наBrent deprives the market of the ability to show a long upward trend. Thus, it is likely that the ruble’s just getting a breather before the new wave of sales.

In the current environment need to be afraid of two things. First, wave of profit-taking, if oil fails to hold above $ 50.00./Barr. At the moment the growth attempts are short-lived and quite volatile in nature. Secondly, even with the growth of Brent above 50.00, the strengthening of the ruble can not carry such a strong character: it is possible that the monetary authorities will intervene in the dynamics of the national currency. Most likely, the mark of 64.00 USD/RUB will not be passed in the near future.

EUR/USD finally decided to strengthen, rather on the correction from the strong technical support than any economic data. Moreover, yesterday’s us data came out above expectations, however, are unable to stimulate additional demand for the US dollar. It seems that the market begins to move away from the euphoria of verbal intervention by the fed, are inclined to search for real evidence of the strength of the us economy. Published on Friday data on US GDP for the 1st quarter will be a great test: if a report fails to satisfy the optimism of traders, уEUR/USD has all chances to consolidate above of 1.12 with the immediate goal at the level of 1.1280.

The test for the fed 27.05.2016

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