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    Market Update – 02-05-2016

    Currencies

     

    EUR/USD – with the continued weakening of the USD we are currently trading above the just breached resistance around the 1.1455 level and are currently trading at the highest level since October 2014. We can assume that the ECB is not really happy with the stronger EUR as it is likely to hurt exports.

    EURUSD

     

    USD/JPY – has moved significantly down after the BOJ surprisingly decided not to change its policy. This was definitely not what was expected and as such we could see such an aggressive reaction, once more proving the importance of using with stops. We are currently trading at the lowest level since October 2014, with the nearest support levels around the 105.3 and 104.9 levels. As always, the stronger the JPY gets, especially when it happens so fast, there is the possibility of intervention by the BOJ as a stronger JPY is bad for exports.

    usdjpy

     

    GBP/USD

     
     

    Indices

     

    Dollar Index – with the break of the support around the 94.570 level we have seen a further downturn, which accelerated after the BOJ decision which saw a significant strengthening of the JPY.

    dollar index

     

    Nikkei 225 – with the strength of the JPY we can see the Nikkei drop sharply as well as the stronger JPY is likely to hurt exporting companies. Although we are trading much lower, we are still higher than the lows of early April when the JPY also strengthened, even though the JPY is stronger now.

    nikkei

     

    S&P 500 – since reaching the resistance around the 2100 level a week and a half ago we have seen a large retraction.

    S&P 500

     
     

    Comodities

     

    Gold – has shot up as the USD weakening and is trading near the psychological 1300 level, a level last reached in January 2015. This year we started at 1065 and within 4 months we have risen well over $200 an ounce, which is quite a sharp move.

    gold

     

    Silver – while there was a small disconnect in the correlation between gold and silver, but as we can see in the chart below, this disconnect has practically disappeared after the strengthening of silver over the last few days.

    silver

     

    Oil – has risen sharply as the USD weakened, boosting commodity prices across the board. Furthermore we see that the production in the US is still decreasing, albeit at a slower level than previously, which is a logical result of the higher oil prices. Herein also is the danger, as higher prices, brings back up production, which in turn will result in an increase of the oversupply and we can see the price drop again. In addition Iraq is producing near record levels as well, so it remains to be seen if and how long these prices are able to hold.

     
     

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