The US dollar recovered from its recent low, as markets gained again some confidence, following the recent sell-off, with the US Dollar Index (USDX), which measures the performance of the dollar against six other major currencies, closing 0.27% up on Friday.
The Turkish Lira (TRY) continued to recover, reaching the highest level in almost two months, following the release of the captive American pastor, which was earlier the reason for the US to levy sanctions against certain people at the helm of the Turkish government. Despite both sides clarifying that there was no deal for the release, markets saw this as an important factor for the normalization of relationships between the US and Turkey.
After the recovery on Friday, many equity future indices, especially in Asia and the US traded lower on Monday morning, while European indices showed mixed results. Especially the Italian indices were up, ahead of the government’s decision on the final budget proposal.
After a relatively calm weekend a significant spike in volatility was seen in cryptocurrency markets on Monday morning starting at 5AM GMT, with prices initially moving higher.
On Monday in Switzerland the Producer and Import Price Index will be released. In the United States the Empire State General Business conditions survey, Business Inventories as well as Retail Sales statistics will be published.
In the Asian-Pacific trading session New Zealand will publish its Consumer Price Index (CPI). In Australia the minutes of the last meeting of the Reserve Bank of Australia (RBA) will be released and China publishes its CPI and PPI statistics for September.
EUR/USDDespite positive data from the Euro zone, the EUR/USD closed lower on Friday, due to the strength of the dollar. German CPI was as expected at +2.3% y/y in September, while the European Industrial Production unexpectedly rose to +1.0% m/m (expected +0.4%), after only a month earlier suffering a setback.
Import Prices in the US however were up by 0.5% (expected +0.2%) in September, while Export Prices stayed unchanged. The University of Michigan Consumer Sentiment level survey also fell below expectations at only 99.0 (expected 99.5).
The euro could be impacted by results from the ongoing Brexit negotiations between the EU and the UK, as well as by what budget the Italian government actually presents on Monday after earlier it revealed higher deficit targets, which drew concerns from the European Commissions and investors.
Some key economic data is expected later this week, such as the Italian CPI or the European Trade Balance statistic due on Tuesday.
Gold prices confirmed the new support levels and continued trading higher above the range held since August. Meanwhile the number of net speculative short positions in gold future contracts, according to the Commodity Futures Trading Commission's (CFTC) weekly Commitments of Traders (COT) report were again up to a new record of 38.2 thousand contracts.
One explanation given by analysts for the sudden move in gold, is the sell-off in equity markets last week.
A key events this week will be the release of the minutes from the FOMC September policy meeting later on Wednesday.
Oil traded higher on Friday, after prices reached almost at a 3-weeks low on Thursday. While Hurricane Michael was responsible for a temporary reduction of crude oil production by 32%, economists do not expect it to have significant impact on the oil industry, as no significant damages are expected.
The US Baker Hughes Oil Rig Count rose to 869 operating oil rigs. This is the highest production level in more than two months.
Oil prices were moderately up on Monday morning with analysts concerned about what the disappearance of the Saudi journalist Khashoggi, who was a vocal critic of the Kingdom’s policies at the country’s embassy in Istanbul would mean for the global markets. US President Trump is under pressure to act against the Saudis, in case the accusations that Khashoggi was murdered by them are found to be true. Meanwhile Saudi Arabia vowed to act against any sanctions the US or other countries could place on them, which analysts believe would come mainly in tightening oil supplies or increasing the prices.
On Tuesday the American Petroleum Institute (API) will release its crude oil stockpile statistic, followed by the Energy Information Administration (EIA) on Wednesday.
Previously battered indices, especially the tech index NASDAQ (US Tech 100) had a strong comeback on Friday, easily surpassing the performance of comparable European indices. Besides tech values, especially ‘Consumer Discretionary’ stocks (US Cyclicals ETF +1.99%) traded up, while minor losses were seen in the real estate (US Real Estate ETF -0.09%) sector.
Shares of Citigroup (NYSE:C) (+2.01%) were among the best performing in the banking sector after the company disclosed belter than expected earnings and on target margin levels. In contrast shares of JP Morgan Chase (NYSE:JPM) (-1.16%) closed lower, despite the gains in earnings and revenues in the third quarter financial results, reaching around the level expected by investors.
Snap (+5.73%) traded again higher, up from its all-time low last week, below $7 per share. A recent study indicated that Snap, the company which makes the Snapchat app, could go private if it fails to get better monetization, as the company is now cheaper than the valuation at the time of the IPO of $17.
The earnings season is just getting started, with some of the biggest companies disclosing their quarterly results this week. On Tuesday companies like Netflix (NASDAQ:NFLX), Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS) and Johnson & Johnson (NYSE:JNJ) will publish their quarterly results.
