Currencies

GBP/USD rallied on Friday at support

The Cable rallied a bit during the trading session on Friday, using the 1.40 level as support. The dollar lost ground on Friday and gave up its gains on the back of weak US Jobs report data. The US economy added 103,000 jobs in March well shy of market expectations of 188,000 which caused the dollar bears to return to market. A move above the 1.41 level should send this market to the 1.4250 level. The economic calendar will remain fairly light for the GBP in the coming week, while for the dollar, the CPI is due on Wednesday along with the FOMC meeting.

Dollar to slid on weak US Jobs data

The EUR/USD pair initially fell during the week but found adequate support at the previous uptrend line to rally slightly and form a hammer. The weak US Jobs report data caused the dollar sellers to return to the market. The US economy added 103,000 jobs in March well shy of market expectations of 188,000. The market looks likely to continue to build up momentum to the upside and if we break above the 1.25 handle, the market could go much higher. There is enough support at 1.21 level underneath and as long as the week low of 1.2215 holds, an upward bias will remain intact. For the week ahead, the big items on the macro-economic calendar both take place on Wednesday, with March inflation numbers being released early in the US morning and Fed’s March rate hike meeting minutes being released later in the day while the ECB Monetary Policy meeting account will held on Thursday at 3.30 pm UAE time.

Technically Bullish

The Australian dollar is highly sensitive to risk appetite overall, as we have a lot of concerns when it comes to the potential trade war between the United States and China, which of course directly affects the Australian economy as the Australians supply China with a lot of their raw materials. The Aussie took a hit last Friday when US President Donald Trump ordered his trade advisors to target a further $100 billion in tariffs on Chinese imports, on top of the $50 billion already under consideration. This announcement came just as investors were increasing bets that the trade spat between Washington and Beijing might be cooling a little. The Reserve Bank of Australia certainly seems in no great hurry to lift the key Official Cash Rate from its 1.50% record low. That has been in place now since late 2016, taking the title of the longest unchanged base rate in Australian history. The Australian economy is revving quite nicely in some areas, notably the manufacturing sector where activity hit a record high last month according to the latest Purchasing Managers Index survey released last week.

Equities

Rise in risk due to Trade war

U.S.-China trade tensions stepped up another notch after President Donald Trump instructed the U.S. trade representative to consider slapping an extra $100 billion in tariffs on Chinese goods. China responded by indicating it wouldn't back down, saying it would fight back at any cost, according to a statement from the Commerce Ministry. Investors are worried the trade woes could shrink world trade and trigger a global economic slowdown, damaging corporate performance worldwide. Hope for diplomatic solution came down when China retaliated that in such circumstances negotiations are not possible.

Fundamentally sound

Last year sales were $91 Billion which was more than double the nearest competitor. The company has raised dividend each and every year since 1976. Company's growth strategy is to move away from restaurant ownership and grow their franchising ultimately to 95% as part of cost cutting efforts. At current price the annual dividend yield is of 2.57% which may not look exiting to some investors but in such a uncertain market where Global political concerns have taken over, McDonald's with a steady dividend and not so high volatility is a good company to invest.

Metals

Trade war tensions escalate

Gold prices rallied late Friday as US President Trump ordered his trade advisors to target another $100 billion in tariffs on Chinese imports, apart from the $50 billion already under consideration. This announcement came just as investors were increasing bets that the trade spat between US and China might be cooling a little. This caused the demand for the safe heaven metal to increase. Moreover, the disappointing Non Farm payroll data, caused the dollar to slide downwards. A weak dollar, makes the precious metal more affordable thus increasing the demand. The escalating trade war tensions and the weak dollar both support the uptrend in gold.

Tariff war consequences

Recent tariffs enacted by the U.S. and China that helped send copper to its worst Quarter since 2015 have also cooled the palladium rally, with some investors uneasy that higher manufacturing costs will lead to slower global economic growth and lower commodity demand. Signs of softening demand for palladium are already emerging. The U.S. auto industry suffered its first annual sales decline since the financial crisis last year, and reported underwhelming sales early in the year. Tariff war to enter into a more escalating and vicious cycle, as a result global growth will be reevaluated.

Energies

Major trendline support

The Crude oil WTI fell by more than 2.5% on Friday to $61.93 on the back of renewed trade war fears. President Trump said he would another $100 billion in tariffs on Chinese imports, apart from the $50 billion already under consideration, which resulted in an escalation of the trade tariffs conflict between the US and China. However, technically oil prices are on a major trendline support. The forecast for next week will remain at bullish, largely driven by a combination of geopolitics and technical. The growing tensions around the fluid topic of trade wars will likely bring a weaker US Dollar which could, in-turn, help to push Oil prices higher. The EIA will report the crude oil inventories on Wednesday at 6.30 pm. For the week ending March 30,2018, U.S. commercial crude oil inventories decreased by 4.6 million barrels from the previous week. OPEC is expected to continue its production cuts into 2019, and since oil prices are on a major trend line support, the move is expected to be biased towards to the upside in the week ahead.

Cold weather deteriorates the crop

The first full US Department of Agriculture winter wheat rating of the calendar year put it at 32% good or excellent, versus 51% last year which is lowest since 2002. Across the central US temperatures are expected to remain well below normal. The cold weather will keep soil temperatures well below normal and will prevent early corn planting and winter wheat growth from making much progress. With the weather set to continue setback on the crop, we are bullish on Wheat prices.

 

About Century Financial Brokers

Established in 1989, Century Financial Brokers L.L.C.is the region’s leading financial brokerage firm and a well reputed online trading service provider in the United Arab Emirates. Since inception, Century continues to have a strong commitment and dedication towards providing superior and personalized customer experience, and empowering its customers through education, training and support, in line with the values and beliefs of its founder, Mr. Sulaiman Baqer Mohebi, a dynamic and visionary business leader.

Century operates on the world’s leading platform which also provides a wide-range of financial instruments, covering 6 asset classes, across 100 markets worldwide with products ranging from Currencies, Commodities, Indices, Metals, Energies, and Inter-Bank Money Markets for both local and expatriate investors, to meet their diverse trading and investment needs.

 

Source: Matrix PR