Sudden jump in oil ends politically-driven week

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  • Oil prices bounce back in late Friday’s trading ahead of the Baker Hughes report.
  •  Stock markets end up the week with gains, European inflation proves to be weaker than initially thought. 
  •  US dollar gains momentum following splendid industrial output and consumer confidence. 

 
It’s been the ugly week for commodity-related currencies as CAD, AUD and NZD have proved to be the most afflicted in the G10 basket. On the other hand, the Scandinavian currencies (NOK and SEK) have been the strongest following the hawkish Norges Bank statement as well as brisk inflation coming from Sweden. On top of that, the greenback has had quite the successful week being ultimately underpinned by the best consumer confidence since 2004 as well as the healthy reading of industrial output for February.


As far as equities are concerned, the last session this week has brought decent gains across the board. The US benchmarks have gained post macroeconomic readings, in turn, the European stock markets have been partially buoyed by lower than initially estimated price growth in February. Finally, let’s mention oil prices which jumped out of the blue in late trading on Friday with no particular reports standing behind. Still ahead, the weekly Baker Hughes report concerning a change in active oil rigs so oil traders should stay cautious when market gets thinner.

 

  • The disappointing housing data did not dent either the US dollar or US equities even as they could have added to concerns about a condition of the country’s housing market amid an environment of rising borrowing costs.  


According to the Eurostat CPI grew just 1.1% in February slipping from 1.3% seen in the prior month and missing the initial print at 1.2%. The prime reason were lower food prices - the similar case was seen elsewhere as well. What deserves more attention if the fact that the average CPI rate has been 1.22% (after the data for two months) pointing to the lacklustre pace of price growth in comparison to the latest ECB staff macroeconomic projections looking for a 1.3% increase in the first quarter. If the forecast is to materialise, the March inflation data would have to exceed 1.4% (excluding rounding).


The political reshuffle in the White House does not seem to be coming to an end any time soon. After firing Gary Cohn and Rex Tillerson US President Donald Trump is purportedly set to fire his national security adviser McMaster before meetings with North Korea due in May, according to multiple source which reported to CNN. Financial markets have barely reacted to those revelations (except for another decline in the USDJPY), however, it underlines that we could be still a long way off from the end of the political reshuffle in the US therefore there is the likelihood that political threads will prevail those concerning macroeconomic ones.


When Bitcoin futures were being introducing to the CBOE the hype related to cryptocurrencies was outstandingly high. After several months later the same exchange is reportedly planning to expand its crypto-related activity beyond Bitcoin futures. Namely, it wants to launch derivatives contracts on other virtual currencies. According to CBOE President Chris Concannon "the vision is to have a crypto complex", however, he did not specify cryptocurrencies they are targeting but apart from Bitcoin the biggest coins are Ethereum, Ripple, Bitcoin Cash as well as Litecoin.