February 20, 2018

Time (GMT) Currency Event Previous Forecast
All Day CNY Bank Holiday
00:30 AUD Monetary Policy Meeting Minutes
10:00 EUR German ZEW Economic Sentiment 20.4 16.5
All Day EUR ECOFIN Meetings
13:30 CAD Wholesale Sales m/m 0.7%

 

Global Commentary

While Chinese markets remained closed Monday for the Lunar New Year holiday, many other markets reopened after their shorter holiday breaks. The best gains came out of Japan however, where the Nikkei rose 1.97% as the Yen finally began to retreat against the U.S. dollar, pushing shares of Japanese exporters solidly higher. South Korean investors returned from their Lunar New Year break to send the Kospi 0.87% higher. Australia’s S&P/ASX 200 was also up by 0.64% as banking shares rebounded, and corporate earnings in Australia have been quite strong this earnings season. Markets on mainland China remained closed, as did Hong Kong and Taiwan. These Chinese linked markets will reopen this coming Thursday.

European markets slipped lower on Monday as investors had little to go on in terms of catalysts, with Chinese and U.S. markets closed for holidays. The broad based Stoxx Europe 600 ended the day 0.63% lower, with Germany’s DAX dropping 0.53% and the CAC 40 losing 0.48%. The Euro was flat on the day, which had no impact on equities, however bond yields rose modestly, weighing on the equity markets. London’s FTSE paused as well after making its best weekly gain in over two years last week. The FSTE was 0.64% lower at the close, snapping a three session winning streak.

In the U.S., major benchmark indices were unchanged as markets there were closed for the President’s Day holiday. Trading will resume on Tuesday and markets may open lower as futures were lower during the day on Monday.

 

FOREX

Cryptocurrencies – Cryptocurrencies moved cautiously higher for the most part on Monday, with Bitcoin trading above the $11,000 level for the first time in three weeks. The top cryptocurrency still needs to make more progress higher until the downtrend can be called ended, but it does look as if it can keep making steady gains until it gets to the $12,000 level. Bitcoin Cash and Ethereum both made modest gains, rising 0.6% and 0.3% respectively. Litecoin also kept rising after forking on Sunday, gaining 1.9%, while Ripple edged lower by 0.1%.

USD/JPY – The pair made a nearly textbook reversal after printing a hammer candle on Friday as it gapped higher at the open Monday, and continued rising throughout the session. The move had the pair continuing higher off the support at the 106.00 level as the U.S. dollar firmed broadly against rival currencies. Markets were closed in the U.S. on Monday, so this move could reverse itself once U.S. traders return Tuesday, but considering it began in the Asian session we may have seen the pair put in a bottom. Equities markets have certainly calmed, and this should have traders coming back out of their Yen positions as the safe haven demand diminishes.

 

Commodities

Metals – Precious metals headed lower on Monday in electronic trade as the U.S. holiday gave most traders the day off in North America and as the U.S. dollar steadied. April gold lost $5.40, or 0.4%, to $1,350.80 an ounce in electronic trading, while March silver shed $0.05, or 0.3%, to $16.66 an ounce.

Oil – Crude futures rose Monday as escalating tensions in the Middle East caused traders to buy in anticipation of potential supply disruptions. West Texas Intermediate crude futures rose $0.80, or 1.3%, to $62.35 a barrel, after gaining 4.2% last week. It was the fourth consecutive winning session for WTI crude. Brent crude, the global benchmark, added $0.72, or 1.1%, to finish at $65.56 a barrel. Brent rose 3.3% last week.

 

Indices

S&P500 – The S&P was unchanged on Monday as U.S. markets remained closed for the President’s Day holiday.

FTSE 100 – London’s benchmark index fell on Monday, snapping a three session winning streak as investors had little reason to bid up equities. There was nothing in the way of catalysts for markets with a lack of economic data, and markets closed in the U.S. At the close the FTSE was 0.64% lower on the day, although the Pound remained flat and was no impact on equities.

S&P/ASX 200 – While it remains a laggard in the Asian region, the S&P/ASX 200 rose 0.64% on Monday, hitting a two week high as banking shares rebounded, and other areas of the market have been getting a lift from a round of solid corporate earnings. In the banking sector, Commonwealth Bank of Australia was up 0.5%, National Australia Bank added 0.8%, ANZ was up 0.7% and Westpac lagged as it advanced 0.4% following a downgrade from Morgan Stanley. The Australian benchmark index remains 2% lower year-to-date.


Stocks

Deutsche Bank – Shares of the German bank rose 2.13% on Monday after announcing it would be cutting a minimum of 250 mid and senior level banker jobs across its corporate and investment banking units. Ongoing cuts could affect as many as 500 jobs eventually. Shares hit a high of $17.07 a share on December 18, 2017 but since then have dropped as low as $12.67 a share a week ago. Despite the rebound today, shares remain under heavy ongoing pressure, which could see the stock retesting its 5 year low near $10 a share hit this past September. Investors have seen little signs of improvement at the bank, which has continually missed profit expectations over the past several quarters.

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