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Old 04-04-2017, 08:11 AM
Libertex Libertex is offline
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Weekly Financial Markets Review

U.S. indices recovered after the setback caused by Trumpís health care defeat in the Congress. Apparently, the market focuses on the state of the U.S. economy.
The upcoming week will bring quite a bit of interesting reports. Those include data on ISM Manufacturing and Services indices. And, undoubtedly, the most important release of the week Ė NFP data. Strong U.S. statistics will contribute to the continued U.S. index growth. Although a short-term drop might be the first reaction amidst expectations of an earlier rate increase.
However, there is a risk factor. A meeting between Trump and Xi Jinping, President of P.R.C., is scheduled for Thursday. A lot depends on how the meeting goes. If there happens to be no constructive dialogue, S&P 500 (ES) may fall back to 2,317.50. And it may be the case because Trump has repeatedly exhibited his protectionist attitude.

Commodity Market

Oil managed to recoup losses. Brent quotes are back to $53 a barrel. Further growth is doubtful. Oil is still affected by contradictory factors.
Brent (BRN) is highly likely to stay within the limits this upcoming week. It will vary between 50.00 and 54.20. The energy carrier is supported by hopes for renewal of the agreement to cut oil production for another 6 months as advocated by Kuwait, Iraq, Venezuela, Angola and Algeria.
Those efforts are opposed by a continued increase in drilling activities in the U.S. According to Baker Hughes, over the last 12 weeks the number of active drilling units, along with the production in the U.S., has been on the rise, which has been slowing down the rates of oversupply reduction on the global market. Especially since the reserves are enormous. That factor can impede with a considerable oil price growth. That is why sellers can become active at the resistance line of 54.20.

Exchange Market

Recently the Australian Dollar has been looking vulnerable. AUD/USD quotes went down even when most of USD opponents were taking advantage of its weakness.
The Reserve Bank of Australia (RBA) will announce its decision concerning the monetary policy this upcoming week. We do not expect the RBA to reduce the rate. Such conclusions are suggested by the minutes of the March meeting when the RBA announced that it was expecting a consistent growth in the price pressure. That is why a lot will depend on comments from the regulatory body.
Hints at a tighter policy are unlikely. Recovery of GDP growth rates relies on relatively low rates. And, if the regulatory body lets us know once again that an expensive AUD is an obstacle to economy recovery, the Aussie will be under pressure. Therefore, AUD/USD will aim at reduction to 0.7490 after hitting 0.7580.

Ivan Marchena, analyst of Libertex
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