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January 16, 2017

Time (GMT) Currency Event Previous Forecast
00:01 GBP Rightmove HPI m/m -2.1%
04:30 JPY Tertiary Industry Activity m/m 0.2%
06:00 JPY Prelim Machine Tool Orders y/y -5.6%
All Day USD Bank Holiday
23:50 JPY Core Machinery Orders m/m

 

Global Commentary

Asian markets exhibited some weakness Friday as investors took a more cautious stance ahead of the weekend, and ahead of the U.S. presidential inauguration as uncertainties still surround the future of economic and fiscal policies in a Donald Trump administration.  Australia’s S&P/ASX 200 underperformed the region, falling 0.79% and ending at session lows as financials followed the losses on Wall Street and led the market lower.  Japan’s Nikkei took an opposite course and finished the day 0.80% higher, with some weakness in the Yen against the U.S. dollar helping to lift Japanese equities.  The Shanghai Composite on mainland China ended with a 0.21% loss, but Hong Kong shares continued higher, gaining 0.47% and posting the sixth winning session out of the past seven.  In South Korea the Kospi ended the day 0.50% lower, while the Straits Times Index in Singapore outperformed with a 1.07% gain.  European markets rebounded, erasing Thursday’s losses as they moved broadly higher.  The Stoxx Europe 600 ended the day 0.95% higher, with Germany’s DAX advancing 0.94% and the CAC 40 in France adding 1.20%.   In London the FTSE extended its winning streak to a fourteenth consecutive session as it tacked on 0.62% for the day.  Markets in the U.S. began the day on strong footing, but began to stumble in the afternoon and finished the day mixed.  At the close, the S&P 500 was higher by 0.18%, the Dow dropped 0.03%, and the Nasdaq scored a new record closing high as it advanced 0.48%.

 

FOREX

EUR – The Euro firmed against the USD on Friday, while ending the session unchanged versus the Pound and softer against the Yen.

GBP – The Pound ended the day firmer against the USD and was unchanged at the close against the Euro, while softening versus the Yen.

USD – The USD reversed early strength to finish the day broadly softer against rival currencies Friday.

JPY – The Yen was broadly firmer against rivals on Friday, gaining strength late in the day as traders moved to risk-off positions ahead of a long U.S. holiday weekend.

TRY – The Lira began the day weaker, but ended the day firmer against major currencies after calls were made once more for Turkish citizens to convert foreign currencies to Lira.  It was also reported that Bank of China would open a deposit bank with Turkish Lira funding in excess of $300 million.

RUB – The losses in the crude market caused the Ruble to tumble on Friday, softening broadly against major currencies and erasing some of the gains made in the previous session in response to crude strength.


Commodities

Metals – Precious metals fell on Friday as the USD firmed, but they did hold onto weekly gains.  Gold for February delivery fell $3.60, or 0.3%, for the session to settle at $1,196.20 an ounce, but was roughly 1.9% higher on a weekly basis.  March silver fell $0.06, or 0.4%, to finish at $16.765 an ounce, and was 1.5% higher for the week.

Oil – Crude retreated Friday as traders began to have doubts about compliance with OPECs agreement to cut production to help stabilize crude prices.  February West Texas Intermediate crude fell by $0.64, or 1.2%, to settle at $52.37 a barrel Friday, and was roughly 3% lower on a weekly basis for its worst weekly loss in ten weeks.

 

Indices

S&P500 – The S&P started Friday’s session with strength, but the gains began to wither around the lunch hour as investors became increasingly cautious ahead of a three day holiday weekend in the U.S.  Profit taking pulled the market lower in the afternoon, and by the close the S&P was holding to a modest 0.18% gain for the day.

DAX – The DAX opened higher and continued to rise steadily throughout the day on strength from the automakers and pharmaceutical companies, which rebounded from the previous session’s losses.  By the close the DAX was 0.94% higher, ending the week on a high note.

Nikkei – The Nikkei gained at the open Friday in response to overnight weakness in the Yen versus the U.S. dollar.  As the Yen continued to weaken the index jumped higher following the lunch break.  It pulled back slightly from that push higher, but still ended the day 0.80% higher for the session.


Stocks

JPMorgan Chase & Co. – The investment bank rose 0.53% on Friday after reporting better than expected fourth quarter earnings, citing strength in its trading business as a source of the increased profits.  Even so, the stock remains trapped in the range of $85-87 a share that it’s been trading in since early December.  The stock closed at $86.70 a share, which puts it just below the top band of the range, but it remains to be seen if it will be able to break through that resistance and resume the rally that took it from $57.61 in late June to the current levels.  Financial shares responded positively to the election of Donald Trump as the next U.S. president in November, but that rally has cooled considerably in 2017 as uncertainties regarding the economic and fiscal policies of Mr. Trump have arisen.  We believe the stock does have more upside, but not until these uncertainties are put to rest.

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