FOREX

Forex

Forex – The U.S. dollar hit its lowest level against the euro in over a week on Tuesday and fell against other major currencies after Federal Reserve Chair Janet Yellen said it was appropriate for the Fed to proceed "cautiously" in hiking interest rates. Yellen's comments hurt the dollar by pushing out expectations for the central bank's next interest rate hike. U.S. Fed funds futures implied traders saw a 43-percent chance of the central bank hiking rates in July, down from 51 percent on Monday. The euro rose nearly 1 percent against the dollar, and was set to post its biggest one-day percentage gain against the greenback in nearly two weeks. Against the yen, the dollar tumbled more than 0.6 percent to a session low after hitting a nearly two-week high early in the session. The dollar also hit an 11-day low against the Swiss franc.

The U.S. dollar hit its lowest level against the euro in nearly seven weeks on Wednesday following dovish comments from Federal Reserve Chair Janet Yellen that pushed out expectations for the central bank's next interest rate hike. The euro advanced to its highest against the dollar since Feb. 11, while the dollar hit a more than five-month low against the Swiss franc. The Australian dollar, which is closely correlated with commodity prices, soared to a roughly nine-month high’s - which are U.S. dollar-denominated - rose and became cheaper for holders of other currencies.

The U.S. dollar was little changed against a basket of major currencies and hovered near more than five-month lows on Friday after traders grew less confident that stronger-than-expected U.S. economic data would alter the Federal Reserve's dovish course. The dollar initially rebounded from recent losses after Labor Department data showed a jump in U.S. non-farm payrolls and average hourly earnings last month and a separate U.S. manufacturing report for March was better than expected.

 

INDICES

Indices

Indices - An index of global stocks edged higher on Monday, as did Wall Street, which was bolstered by a softer dollar as weak U.S. economic data cut expectations of a near-term interest rate increase by the Federal Reserve. With share markets in Europe, as well as those in Australia, New Zealand and Hong Kong closed for holidays following last week's Good Friday holiday, trading was generally light for much of the day.

A majority of global stocks on Wednesday climbed to near its highest point of the year while the dollar weakened as easing concerns about potential interest rate increases led investors into riskier assets. The Dow Jones industrial rose 0.47 percent, the S&P 500 .SPX gained 0.44 percent and the Nasdaq Composite added 0.47 percent.. The pan-European FTSEurofirst 300 index advanced 1.3 percent and the MSCI's index of world gained 1.1 percent.

Stocks on Wall Street rose on Friday after better-than-expected U.S. jobs and factory survey data, but a gloomy manufacturing report in Japan knocked other global equity markets lower and crude oil prices slumped. Nonfarm payrolls increased 215,000 and the unemployment rate rose to 5.0 percent from an eight-year low of 4.9 percent, the U.S. Labor Department said. The jobless rate rose as more people continued to seek work, a sign of confidence in the jobs market.

A gloomy Japanese manufacturing report kept a damper on global equity markets. Business sentiment among Japan's big manufacturers deteriorated to the lowest in nearly three years and is expected to worsen in the coming quarter, a closely watched central bank survey showed on Friday. The survey heightened pressure on Prime Minister Shinzo Abe and the Bank of Japan to do more to shore up the ailing economy. Japanese stocks tumbled 3.6 percent to a one-month low. (Full Story)

Shares in Europe also slid to a one-month low, with the pan-European FTSEurofirst 300 index closing down 1.5 percent. MSCI's all-country world stock fell 0.48 percent.

 

COMMODITIES

Commodities

Commodities - Gold edged up on Monday, as the dollar retreated after weaker-than-expected U.S. data, but stayed close to a one-month low with investors focused on speeches by Federal Reserve officials that could give more clues on potential interest rate increases.

Gold fell more than 1 percent on Wednesday as a rally in assets seen as higher risk, such as equities, prompted some investors to cash in gains sparked the previous day by Fed chair Janet Yellen's cautious tone on further rate hikes. Yellen's comments, which had sent gold up nearly 2 percent, signaled interest rates will likely rise only gradually and reassured gold investors, as higher rates boost the opportunity cost of holding non-yielding assets like bullion. Gold fell more than 1 percent on Friday after U.S. March payrolls data beat expectations, allaying some fears about the U.S. economy and stoking speculation about the timing of likely interest rate hikes by the Federal Reserve this year.

Raw sugar, arabica coffee and cocoa on ICE Futures U.S. all advanced on Monday in relatively subdued trade after the long holiday weekend, supported by losses in the U.S. dollar. Trading of white sugar, robusta coffee and London cocoa on ICE Futures Europe was closed due to the Easter Monday holiday in Europe. London and New York softs markets on ICE had been shut for the Good Friday holiday. Sugar and cocoa futures on ICE Futures U.S. edged higher on Wednesday on a weaker U.S. dollar, as arabica coffee futures declined on bearish technical signals. ICE May raw sugar edged up 0.1 percent, and ICE May white sugar settled up 0.3 percent. Investors have piled into sugar on expectations of a supply deficit emerging this year, lifting the front-month to a 17-month high last week. ICE May robusta coffee closed up 0.5 percent and ICE May New York cocoa rose 0.1 percent.

 

ENERGY

Crude Oil

Crude Oil - Oil futures edged lower for a second straight session on Monday in thin trade as European markets observed the Easter holiday and as hedge funds and other big speculators were still hesitant to wager on a two-month long price rebound amid hefty crude inventories.

Sentiment in Brent and U.S. crude's West Texas Intermediate (WTI) futures remained soft with investment banks, such as Barclays and Macquarie, warning that market fundamentals were weak enough to pull prices back to $30 a barrel levels.

Oil prices settled steady on Wednesday, erasing most of the day's gains, after U.S. government data showed crude inventories at all-time peaks again despite strong refinery runs. Crude stockpiles in the United States rose 2.3 million barrels last week, reaching a seventh straight week of record highs at 534.8 million barrels, the Energy Information Administration (EIA) reported. The build was a million barrels less than forecast by a Reuters poll. Still, some analysts worried that stockpiles rose even with refinery utilization at the highest seasonal rate since 2005.

Oil tumbled about 4 percent on Friday, after a Saudi prince reportedly said the kingdom will not freeze output without Iran and other major producers doing so, and data showed the global crude glut was likely to grow. Data released separately by the U.S. Commodity Futures Trading Commission showed hedge funds and other big speculators cut their net long position in U.S. crude for the first time in six weeks during the week to March 29 as investors feared the rally may not continue.

Natural Gas

Natural Gas – U.S. natural gas futures on Monday edged higher after the long Easter holiday weekend despite the latest midday forecast for warmer, near-normal weather over the next two weeks.

After losing 5 percent last week, the natural gas front-month futures contract on the New York Mercantile Exchange closed up 4.2 cents, or 2.3 percent.

Natural gas futures lost almost 2 percent on Thursday after the government reported a slightly bigger-than-expected storage draw. The U.S. Energy Information Administration said utilities pulled 25 billion cubic feet of gas from storage during the week ended March 25 after adding 15 bcf in the prior week. That was slightly bigger than analysts' estimates for a 22 bcf draw in a Reuters poll and compared with a withdrawal of 10 bcf a year earlier and a five-year average draw of around 22 bcf.

U.S. natural gas futures gained over 8 percent for the week after ending little changed on Friday on forecasts for steady, seasonally cool weather over the next two weeks. Front-month gas futures on the New York Mercantile Exchange closed down 0.3 cents. Analysts said utilities likely left a record high 2.5 trillion cubic feet of gas in storage at the end of the November-March winter season because heating demand was about 14 percent below normal due to the warming effect of the El Nino weather pattern.


 

The information set forth herein was obtained from sources which we believe to be reliable, but its accuracy cannot be guaranteed. It is not intended to be an offer, or the solicitation of any offer, to buy or sell the products or instruments referred herein. Any person placing reliance on this commentary to undertake trading does so entirely at their own risk.

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