Forex:Â Forex markets were quite volatile and attractive for trading last week. The release of a substantial amount of economic data, along with many press conferences, led to serious trading and movements, especially in the major currency pairs.
The euro was supported by ECB President Mario Draghi, who said that currently there are no plans for further monetary easing in Europe. Following his statement, the most popular currency pair, EUR/USD, rose by 131 pips for the week and closed just above the psychological 1.3700 level.
The yen, on the other hand, remained under pressure as it became clear that the Bank of Japan will continue with its easing monetary policy in the near future, and hence the USD/JPY closed at 102.86, or 159 pips higher than the previous week.
Indices
In recent months, both analysts and investors have been commenting that leading stock indices will start to fall when sufficiently positive data on the recovery of the US economy is announced. Reasons for such fear and forecasts come from the Fed’s officials and Ben Bernanke himself, who has reiterated on many occasions that if unemployment begins to decline, the quantitative easing programme of $85 billion per month will be reduced. However, market participants’ concerns proved to be in vain, after Friday’s impressive labour data from the US, which showed the country’s unemployment rate falling to 7% for the first time since 2008, failed to pull the indices down, but instead sent them up the charts. The S&P500 closed the week at 1,805 points, the Dow ended at 16,016, while the Nasdaq100 added 1.61% to 3,503.
Despite Friday’s green wave coming from the US, European stock indices remained on the red for the week. Germany’s DAX30 closed the period with a decline of 1.12% to 9,200 points, France’s CAC40 lost 3.38% to end at 4,142 on Friday, while Spain’s IBEX and Italy’s S&P/MIB both decreased by more than 3%, each for the past 5 days, to close at 9,406 and 18,107 points, respectively.
Commodities
On the commodities market, the scenario from the last few weeks took on stage again. The prices of both gold and silver fell, and the two metals lost 1.13% and 1.82%, respectively. Crude oil futures for January took exactly the opposite direction and rose significantly, with the US WTI closing the week at $97.67 per barrel, or a 4.45% jump.
What to expect this week?
Monday has already released some of its offers for this week, with results showing an unexpected slowing of China’s inflation for November to 3%, soothing market fears for looming policy tightening. Data also showed that Germany’s October Trade Balance has declined to €16.8b, opposite €18.7b in September. The rest of the day is rather empty of market moving events. Tuesday will start with a meeting of the Economic and Financial Affairs Council of the EU, with other highlights also including Australia’s Home Loans for October, China’s Industrial Production and Retails Sales for November (YoY); the UK’s Trade Balance, along with the Industrial and Manufacturing Productions for October (YoY and MoM) and Japan’s Machinery Orders for October (YoY and MoM). Wednesday’s main entries will come from Germany’s Consumer Price Index for November (MoM and YoY), the US Mortgage Applications and the Reserve Bank of New Zealand Interest Rate decision. Thursday will offer Australia’s employment data for November, the ECB monthly report on the prevailing economic situation, the Eurozone Industrial Production for October (YoY and MoM) and the US Initial Jobless Claims and Retail sales. Friday will end the week with Japan’s Industrial production for October (YoY), the Eurozone Employment Change for Q3 (YoY and QoQ) and the US Producer Price Index for November (YoY and MoM).
