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April 25, 2016

April 25, 2016

Time (GMT) Currency Event Previous Forecast
All Day NZD Bank Holiday    
All Day AUD Bank Holiday    
All Day EUR Italian Bank Holiday    
08:00 EUR German Ifo Business Climate 106.7 107.1
14:00 USD New Home Sales 512K 521K

Global Commentary 

Asian stocks were mostly lower Friday, though major indices in China and Japan ended the day with gains.  The Nikkei in Japan was 1.20% higher, cementing a 4.3% weekly gain and posting the second consecutive weekly gain.  Mainland China’s Shanghai Composite ended the day higher by 0.22%, though it put in the worst weekly performance since January as it ended 3.9% lower on a weekly basis.  In Australia the S&P/ASX 200 fell by 0.69% ahead of a long holiday weekend.  Singapore’s Straits Times index was also off by 0.69%.  In Hong Kong the Hang Seng failed to gain strength from the mainland and finished with a 0.72% loss.  Rounding out Asia, the Kospi in South Korea dropped 0.33%.  European markets finished lower as inflation data from the region disappointed investors.  At the close the Stoxx Europe 600 was 0.32% lower, though it did book a gain of 1.7% for the week.  Germany’s DAX closed off by 0.60% and the CAC 40 in France fell 0.29%.  London’s FTSE was down 1.11%, erasing a weekly gain and ending 0.5% lower for the week as falling metals prices weighed on the mining sector.  U.S. markets were mixed, with the tech sector getting battered following disappointing earnings from Microsoft and Alphabet Inc., the parent company of Google.  At the close the S&P 500 was nearly unchanged with a small gain, the Dow added 0.12%, and the Nasdaq dropped 0.80%. 

FOREX

EUR – The Euro plummeted against the USD and Pound on Friday following the dovish statements of ECB president Mario Draghi the previous day and in response to weaker than expected inflation data out of the Eurozone, but firmed significantly versus the Yen.

GBP – The Pound firmed across the board Friday, reversing losses suffered the previous day in sympathy with the falling Euro.

USD – The USD surged higher against the Yen and the Euro, but was softer versus the Pound.

JPY – The Yen was broadly and sharply softer against rival currencies Friday after speculation on the Bank of Japan driving interest rates further into negative territory as well as using both fiscal and monetary policy to combat the recent strength of the Yen and bring new life to the Japanese economy.

TRY – The Lira was mixed Friday as it softened against the Pound and USD, firmed versus the Yen, and finished the day nearly flat against the Euro.

RUB – The Ruble firmed along with crude prices Friday, gaining on the Euro, Pound and Yen, but ending nearly unchanged versus the USD.

Commodities

Metals – Precious metals were flat Friday as traders paused ahead of next week’s FOMC monetary policy meeting.  June gold ended the week down $5.00, or 0.4%, to $1,230.80 an ounce. May silver had a better week, rising $0.665, or 4.1%, to $16.92 an ounce.

Oil – Expectations for continued declines in U.S. crude production sent crude higher Friday and allowed it to post a third consecutive weekly gain.  June WTI crude rose $0.55, or 1.3%, to settle at $43.73 a barrel Friday and was 4.8% higher for the week.

Indices 

S&P500 – After opening nearly unchanged the S&P dropped in morning trade on a batch of disappointing earnings results.  The index recovered in the afternoon, but never made it much higher than the unchanged line as it closed with a slight gain of 0.1 points.  On a weekly basis the S&P was 0.85% higher, posting a second consecutive weekly gain.

DAX – The DAX opened lower and traded in a choppy manner in negative territory all day after disappointing inflation data dampened investor sentiment.  At the close the DAX was off by 0.60% though it did finish off its session low.

Nikkei – Despite overnight weakness from the Yen, the Nikkei began the day in the red.  It remained depressed all morning, but turned higher after the lunch break as traders’ were looking ahead to next week’s Bank of Japan meeting for additional monetary stimulus from the central bank.  By the close the Nikkei was 1.20% higher for the day and posted a second consecutive weekly gain as it tacked on 4.3% for the week.

Stocks

Microsoft – Shares of the tech bellweather fell 7.17% on Friday after the company reported that earnings dropped 25% in the fiscal third quarter versus the same period last year.  Revenues slid 5.5% as well and the drop was the second largest daily percentage loss for the company, eclipsed only by the January 27, 2016 loss of 9.3% that was brought on by disappointing fiscal second quarter earnings.  The drop in the stock saw it slicing through the 50 day moving average, and we could see more losses going forward as the drop in January was similar and the stock continued lower to its 200 day moving average before bouncing.  If that happened it would take the stock down to the $50.59 level from its Friday close of $51.78 a share.

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