US stocks surged on Friday. The US dollar index strengthened a bit but still remained close to the monthly low. Investors reacted on the ECB decision to expand monetary stimulus of the European economy. They believe this may have positive impact on the global GDP growth. Note, that S&P 500 is still 1.1% below this year opening level. The trading volume on the US stock exchanges was 7.5bn stocks on Friday which was 12% below the last 20 trading days average. No significant macroeconomic data are expected today in US.
US dollar index edged higher on Monday amid euro weakening. In Germany the Christian Democratic Union – party led by Angela Merkel – suffered defeats in three states holding regional elections. The German stock market index DAX, on the contrary, was on the rise for the second straight day amid higher industrial production in Europe in January. The stocks of some European central banks and large German industrial companies were advancing ahead of the additional cheap funding from ECB. Investors hope the credit burden will ease substantially after the ECB announced its plans to buy the corporate bonds. US Fed, Bank of England, Bank of Japan and Central Banks of Australia, Switzerland and Norway meetings are due this week. The higher volatility is probable in money markets.
Nikkei is edging up today for the second straight day in line with other world stock market indices. The uptrend has formed after factory orders rose in Japan by 15% month over month in January while the rise of only 1.9% was expected. Early on Monday morning the Bank of Japan meeting will end. No changes in its monetary policy are expected yet but investors are cautious. The yen is traded is a very narrow range.
Oil prices edged down on Monday on the news Iran increased its output by 2mln barrels a day in February from 1.75mln barrels a day in previous month. The Iran’s oil minister Bijan Zanganeh said his country is planning to increase oil production to 4mln barrels a day and only then to freeze it on that level. The Saudi Arabia’s output fell slightly in February to 10.22mln barrels a day compared to 10.23mln barrels in January. Previously, the US announced their plans to cut oil output this year. Now the majority of market participants count on count on oil prices rebound. The net longs in oil on ICE exceed its short by six times. Meanwhile, the Western agencies assume the meeting of OPEC and independent oil producers scheduled on March 20 in Moscow, may be called off. In theory, the matter is likely to clarify after the today’s negotiations of Iran’s oil minister and Russia’s energy minister in Tehran.
Wheat is edging higher amid the continued droughts in the US. Corn prices rose after the USDA report indicated Japan acquired 170.8 thousand tonnes of corn. Thanks to that the US corn export rose in a week to the highest since November. The soy prices fell slightly. The forecast of its crops in Brazil was revised up by the Conab agency from 100.93mln tonnes to 101.18mln tonnes.
Cocoa is advancing for the 3rd straight week amid the droughts in Africa. The sugar prices sky-rocketed. Rabobank revised up its world sugar deficit in the 2015/16 farming year from 4.7mln tonnes to 6.8mln tonnes because of bad weather conditions in India and Thai. Moreover, the global sugar prices increase makes the Brazil’s real stronger. The coffee prices surged on the same reason. What is more, the coffee crops forecasts in Brazil in 2016/17 farming season were too diverse – from 49.7mln sacs to 56.5mln sacs – which destabilizes the market.