Plan your strategies for the trading week ahead with key insights from our team.
We’ve had quite a busy week across the globe. Friday’s non-farm payroll figure was a major disappointment as the US added only 38K jobs. A June rate hike is now off the table, and it might not even happen in July either.
Next week, the focus will be on Japan’s first quarter final GDP data. It’s expected to have grown by 1.5% annualised in the first quarter. Japan’s tax hike is still a major talking point. The hike from 8% to 10% was scheduled to take place by April 2016, but now it’s expected to happen by the end of 2019. From a trading perspective, the USDJPY dipped to 108.50 this week.
The oil market will also be interesting to watch. OPEC failed to reach an agreement this week. Rising financial pressures bring the world’s most cost-efficient producers to raise debt to cope with the cost of extending their market share at the current market price. It seems to be a good time to sell debt as it gives a good alternative to investors looking for returns in this low rate environment, while avoiding highly volatile stock markets. In this context, WTI will likely see resistance pre-$50 as fundamentals haven’t changed, and the global oil glut will continue pressuring prices to the downside. It’s possible that we see a weakening towards the $47.40, May 23rd low, if cleared this could pave the way towards $45.
The Brexit referendum continues to make headlines as it’s only three weeks away. Manufacturing and industrial production data on Tuesday could confirm weakness in activity in April. UK’s trade data is also due out next week. The deficit may have improved according to the consensus. We may expect the pound to remain under pressure in consideration of moderate economic growth and Brexit uncertainties.