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The US dollar overall declined against other major currencies by Friday morning as seen in the performance of the USDX, which measures a basket performance of other majors against the greenback. In emerging markets the sentiment was meanwhile mixed. The USD/INR pair reached a new 11-months low, while the USD/MXN pair continued to climb higher, at the peak trading more than 2.5 per cent up for the week.
Major stock market indices around the world traded lower on Thursday, with losses widening by Friday morning in many markets. Despite this drop in market performance over the past days, the Volatility Index VIX remained almost unchanged.
While Bitcoin traded mostly side-ways remaining for the most part still below the $52k level, the strong upside in some altcoins including TRON and IOTA propelled the total market capitalization of the cryptocurrency market to a new all-time high above $1.6 trillion.
On Friday manufacturing and services PMI number will be released for multiple European countries including Germany, UK and France. Then from Canada data on retail sales and from the US statistics on existing home sales can be expected.
As the EUR/USD pair jumped again above 1.21 by Friday morning, this move might not only be attributed to the weakness of the greenback, but also the relative recovery of the euro, which by Friday morning was trading stronger against most other currencies.
Even the EUR/GBP pair was in the green at this time after a continuous decline over the past week, hitting a new low since March 2020.
French consumer price index (CPI) data released on Friday indicated a stable inflation at 0.6% annually in January. Later Italian CPI numbers also can be expected.
Despite a reversal in the dollar-strength over the past days, gold prices remain depressed with the price of gold reaching a new low since July 2020. While silver and platinum were also down, the chart continues to show a side-ways trend for these precious metals, while palladium extended its losses but is also still trading within a range seen over the past weeks of this month.
In theory the increase in yields on US Treasury Notes could have also impacted the gold market as this raises the opportunity costs of holding precious metals instead of yield-generating bonds. Also, relatively positive economic fundamental data like the high level of building permits or the better-than-expected Philadelphia Fed General Business Conditions survey could have reduced fear in the markets. Still, as the pandemic cannot be surely considered to be over and government stimulus measures might again increase as demanded for example by the US Treasury Secretary Yellen, so might the need for some investors to hedge against currency debasement.
Oil prices turned lower in the afternoon and even the continued significant reduction of inventories according to weekly data by the Energy Information Administration (EIA), which now shows that crude oil stockpiles fell by 7.3 million barrels over the past week, was enough to stabilize prices above $60 per barrel at the end of the day.
In a volatile trading session in the night to Friday, WTI crude oil prices even dipped briefly below $59 per barrels. Other energy commodities including gasoline and natural gas also traded lower at the end of the trading day on Thursday with a strong reversal seen especially in natural gas prices as some of the more-affected local markets by the cold spell are stabilizing. Overall natural gas futures in the March contract closed almost eight per cent lower.
On Friday the US Baker Hughes Oil Rig Count will be published. Over the past weeks and months the number of operating oil rigs has been continuously rising after hitting a low in August.
While the major stock market indices are still not very far from the recent all-time high, still a clearly visible retracement set in, which among other factors might have been spurred by the rising yield on US Treasuries, which in turn raises concerns that funding conditions for heavily indebted companies could deteriorate.
Wal-Mart (-6.48%) shares tumbled after the release of the quarterly earnings failed to meet investor’s expectations, coupled with a projected slowdown in terms of sales growth and possible impact from rising wages.
Boeing (-3.34%) also clearly underperformed compared to the market average as US FAA ordered 222 of the company’s 787 aircraft to be inspected specifically for the decompression panels in the cargo areas.
Next week results from companies including Salesforce and Nvidia will come in then.
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