S&P500 is not going to give up
Forecast for week 8 - 12 of February:
In spite of growth of quotations of the yellow metal in the last three trading weeks, this asset continues to look weak from a fundamental point of view. The last week the precious metal was in demand on the background of weakness of the US dollar. Investors were concerned with a steep peak of yield of the 2-years' US treasuries and that signals that the Fed is not going to raise the rate at the next meeting. However, now it is quite dangerous to rely on strong sales of the US Dollar. The US dollar entered correction phase, but this correction may be accompanied by a long flat within the range -100.00 94.00 on USDX. Strongest rivals of the US dollar - primarily the Euro and the Yen - would not avail from fall of their American counterpart now. In late January, the Bank of Japan decided about a further ease of its monetary policy, the ECB is ready to undertake similar measures in March. Monetary authorities continue to stimulate economy against dropping energy prices. In this regard, strengthening of national currencies is not included in plans of the Japanese monetary regulator and the Eurozone, since it contributes to weakening of inflation which is at very low levels even without additional measures. This week the monetary regulator of the Great Britain also joined the two above-mentioned Central Banks and lowered its forecasts on inflation and GDP for 2016. Thus, a short-term growth of quotations of gold can not be excluded (in the background of correction of the US dollar ), but we can avail from this growth to build short positions. So, this week we should open Sell positions on XAU/USD on growth of quotations to 1175/1189 and take profit at 1125.
XPT/USD and XPD/USD:
This week we expect a moderate growth of quotations on the platinum group of metals for two reasons. Firstly, January's growth of car sales in the USA is a positive factor for the metal, since this industry ensures main demand in these metals, particularly in palladium. We can not ignore Friday's release on labor market in the United States. Average earnings index rose by 0.47% in the first month of the year that will have a positive effect on household spending. Thus, the high rate of car sales can be expected in the first quarter. Secondly, correction of the US dollar has a positive impact on the stock market and thus commodities, since their value is denominated in the US currency. So, this week we should open Buy positions with XPT/USD based on expectations of drop of qutations to 901/890 to TP at 912 as well as to open Sell positions with XPD/USD based on expectations of growth to 498/490 and put TP orders at 511.
This week we expect a moderate growth of quotations for three reasons. First, a positive Friday's release on the labor market in January will increase private spendings in the first quarter, which is usually a positive factor for the US economy. Unemployment has fallen to the level of 4.9%, incomes of population grew by 0.47% against December of the last year. Growth of car sales in January is the best confirmation of this positive trend. However, we should not rely too much on strong growth of quotations: weak ISM for manufacturing and service sectors will force investors to review their medium-term evaluation regarding growth of the US stock market. Secondly, the last week the leading corporation encouraged market participants with a positive financial report for the fourth quarter, which can also stimulate investors to open long positions. Let's elaborate on the reports by Exxon Mobil and General Motors. Despite a significant drop of oil prices, the first company succeeded to reach profit in the amount of $2.78 billion for the quarter. The net profit of General Motors by the end of 2015 amounted to 9.68 bln. US dollars, which is by 145.3% more than in 2014. This positive trend is observed against record-making car sales in the USA (17.47 mln. units in 2015 year). Low inflation boosts real incomes of people. Third, the last week in the stock market, sector of direct materials (+ 5.19%) and the industrial sector (+ 2.7%) were leaders of growth against drop of S&P500 by 3.1%. This positioning may indicate a probable appetite for risk of investors.So, this week we should open Buy positions with S&P500 based on expectations of drop of qutations to 1865/1850 and put TP orders at 1905.
Alexander GoryachevAnalyst of «FreshForex» company
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