Fundamental analysis for a week of 29th November – 4th December

Fundamental analysis

Last week went as planned; I can even say that markets were pretty calm. As expected main stock indices went up, dollar index closed above important 100.00 level, precious metals continued to slide. During this upcoming week, we expect market sentiment to stay the same.

Fundamental analysis

The most important economic event of the week will ECB’s press conference. Market participants are counting on Mario Draghi to expand a size of ECB’s quantitative easing program to reach reasonable inflation levels in the euro zone.

Speaking of emerging markets we expect Turkish Lira to continue sliding because of Russian economic sanctions for Turkey. Vital to mention that terror threat in Europe remains very serious, so there is a possibility to see short-term declines in European stock indices too.

USD. The situation remains the same as last week. We expect USD to continue strengthening against other currencies. Market participants are waiting for FED to raise it’s critical interest rates during their meeting in the middle of December.

Last week’s Commitments of Traders report shows us that USD bulls are still strong. Janet Yellen will also speak in the middle of the week; it will be a very important speech to watch.

AUD. Next week the Australian central bank will announce its decision on the basic interest rate. Market participants expect that the bank will leave them the same but falling commodity prices and does not intend to change sentiment for AUD. Buying this currency now would be risky. The only pair which sees a steady rise would be AUD / NZD.

NZD. The situation remains unchanged, and we are waiting for the global milk auction to be held on Tuesday. We are expecting milk prices to fall further, so, for now, we are on the bearish side of the market.

CAD. A slight rise in oil prices in mid-week helped the Canadian dollar to recover against the American dollar, but bulls of CAD continue to weaken. Deteriorating economic indicators and a further slide in oil prices may be an excellent opportunity to short CAD against USD. Also next week we will have important news from the Canadian central bank. Bank will release their decision on the basic interest rate.

EUR. The challenging economic and geopolitical situation in continental Europe does not help Europe to reach their inflation goals.We will wait for GDP data and Mario Draghi Conference. Fed Interest Rate lifting probability

and subject to the ECB’s policy prompts of further weakening of the single currency.

Gold. Last week endorsed the view that the precious metal does not currently have any values. With stronger dollar we continue to hold short positions and wait for a reversal signs in the gold market. Market participants were disappointed because of weakening demand for gold from India and China. So far it’s hard to expect a recovery price of gold.

European and US stock indices. The weakening of the single European currency can boost earnings of European exporters.In the current situation in the stock market, it is much more likely that European indices will make new highs

In the first part of 2016. The US economy is based mostly on internal consumption, so the dollar strength also does not have a significant impact on US company results. As a consequence, in these financial instruments, I am very bullish too.