Forex News

Spot gold prices fell 0.6% to $1856 per ounce in the session on Friday, as a broader market sell-off weighed on the metal along with a firm USD, as investors await stimulus news in the US. On the macro side, PMI data in Europe showed business activity across the continent fell for the third month led by worsening of both services and manufacturing activity. In the UK, the Johnson administration warned that the UK variant of the coronavirus is deadlier and spreads more rapidly. During the week, gold prices gained 0.4%.

Mexico’s IPC lost 127 points or 0.3% on Friday to 44,684, as rising COVID cases outweighed vaccinations efforts. On Friday, the AMLO administration announced that over half a million people have been vaccinated against the coronavirus and said that state governments and private distributors can apply for emergency use of other vaccines if needed. On the macro side, annual inflation for the first half of January came at 3.33%, slightly above 3.18% in the same period of last year. On Thursday, INEGI data showed that the unemployment rate fell to 3.8% from 4.4% in November.

Brazil’s Ibovespa sank 816 points or 0.7% to 117,513 on Friday to book its fourth consecutive drop, as rising COVID-19 cases, inflation and fiscal concerns coupled with a slow vaccination program and a slowing economy weigh heavily on sentiment. On the pandemic side, Sao Paulo ordered all non-essential activities closed on weekends and limited operations hours on weekdays, imposing the harshest measures in months, as deaths surge in Brazil’s epicenter. During the week, the Ibovespa lost 2.5% and booked its second straight decline. .

WTI crude oil prices fell $1 or 1.9% to $52.13 a barrel to close the week 0.4% lower, as an upswing of coronavirus cases and deaths in China and the announcement of a deadlier COVID-19 variant in the UK outweighed prospects of further fiscal stimulus in the US. Overall crude inventories in the US rose by 4.4 million barrels in the most recent week, verus expectations of a 1.2 million barrel decline. Meanwhile, the US Transportation Department said Friday that travel on US roads fell 11% in November, steeper than October’s decline as coronavirus contagions gained steam.

Canada’s TSX lost 57 points or 0.3% to 17,860 on Friday, as policy uncertainty in the US and rising cases in multiple countries outweighed slow vaccination programs. On Friday, WTI crude oil prices fell $1 or 1.9% to $52.12 a barrel. Also, spot gold prices declined 0.6% to $1855 an ounce. On the economic data front, retail sales for November surprised beat expectations, rising 1.3% over a month earlier and compared to forecasts of a 0.1% gain. Still, preliminary figures for December suggest a 2.6% drop in December as novel coronavirus restrictions were re-imposed. During the week, the TSX lost 0.3%.

Wall Street closed little changed for the second straight session with the Nasdaq eking out a profit and booking a new high, as earnings season continues with mixed results. On the corporate side, shares of IBM sank nearly 10% after the company disappointed analysts’ sales expectations, linking four consecutive quarters of revenue declines. Also, Intel shares dropped 9% despite releasing better-than-expected earnings. On the policy side, a growing number of Republicans have expressed doubts over the need for another stimulus bill, while a Senate committee supported Janet Yellen’s as Biden’s Treasury secretary. The Dow Jones shed 179 points or 0.6% to 30,997. The S&P 500 lost 12 points or 0.3% to 3842. The Nasdaq edged up 12 points or 0.1% to 13,543. During the week, the Dow Jones increased 0.6%, the S&P 500 2.0% and the Nasdaq 4.2%.

Crude Oil WTI decreased 2% to 52.07 USD/Bbl

The FTSE 100 retreated 20 points, or 0.3% to 6,695 on Friday, booking a 0.6% weekly loss, dragged down by weak economic data and as the UK PM Boris Johnson refused to rule out extending the country’s third lockdown until the summer. Flash PMI data pointed to a steep slump in business activity in January, with services once again especially hard hit and manufacturing seen growth almost stalling. Also, recent data showed retailers struggled to recover in December from a partial coronavirus lockdown in November, with retail sales up only 0.3%, well below market expectations of 1.2%. Meantime concerns about rising coronavirus infections and restrictions continue to weight while optimism over additional stimulus from the new Biden administration faded. Among single stocks, travel operator Tui tumbled more than 16%, amid the imposition of further travel restrictions by EU leaders.

The IBEX 35 fell 1.1% to 8,036 on Friday, its lowest since December 22, 2020, in line with its European peers. Banks, travel and leisure stocks were among the worst performers, amid renewed concerns about coronavirus cases and travel restrictions across Europe. At the same time, investors digest latest PMI data for the Euro Area which pointed to a quicker contraction in business activity during January. Spain broke its record for daily coronavirus contagion for the second day in a row, with the Health Ministry reporting 44,357 new infections on Thursday. Meanwhile, Spanish prime minister Pedro Sanchez said he wants to vaccinate the majority of the population before opening the country back up to international visitors, which he expected to be by the end of this summer. The country is also pushing for a 'Covid vaccine passport', that would facilitate the movement of travellers and help the tourism sector. On the week, the IBEX 35 lost 2.5%.

European stocks closed lower for a second session on Friday, with Frankfurt's DAX 30 retreating 0.4% to 13,874 after flash PMI data showed business activity across the continent fell for the third month led by worsening conditions in the service sector and a weakening of manufacturing growth. Airline stocks were among the worst performers, after European leaders decided on Thursday to keep their borders open but to dissuade any non-essential travel to curb the spread of the coronavirus disease. Countries in Europe continue to battle record infections, hospitalizations and deaths and continue to impose tighter measures and lockdowns. ECB President Christine Lagarde warned on Thursday about the effects of a surge in infections on the economic outlook. For the week, the DAX 30 managed to gain 0.6%, lifted by prospects of further US stimulus under Biden’s administration.

The FTSE MIB closed 341 points or 1.5% lower at 22088 on Friday, a level not seen since Christmas, as the battle against the coronavirus forces new lockdowns and shuts down business activities. In addition, European leaders imposed tougher movement restrictions within the EU, causing economically sensitive industries, such as auto, mining, oil and gas, to fall in the red. Among the top losers are Saipem (-3.59%) and Tenaris (-3.47%). For the week, the index went down 1.3%.

The CAC 40 closed 31 points or 0.6% lower at 5560 on Friday, reversing all of its gains in 2021, as the battle against the coronavirus forces new lockdowns and shuts down business activities. European leaders imposed tougher movement restrictions within the EU, causing travel and leisure stocks to fall. In addition, the French government imposed a negative PCR test requirement on incoming travellers from the EU. On the data front, the IHS Markit France Composite PMI declined to 47 in January from 49.5 and below market expectations of 49, pointing to a 5th straight month of contraction in private sector activity. Among the top losers were AccorHotels, down 4.8%, and AirFrance, down 2.5%. For the week, the index went down 0.9%.

The FTSE/JSE All Share Index in South Africa finished 0.3% lower at 63,988 on Friday, down from a record high of 64,512 touched in the previous session, as investors paused for breath after a recent rally driven by hopes of bumper fiscal stimulus in the US. At the same time, renewed concerns over increased restrictions and escalating coronavirus infections weighed on market sentiment. At home, traders remain cautious as tropical storm Eloise threatens to disrupt South Africa's power supply over the weekend. For the week, the benchmark index rose 0.7%, extending gains for a fourth week, the longest winning streak in eight months.

Brent crude fell to around $55.5 a barrel on Friday, after the latest EIA report showed a surprise crude oil inventory build in the US and amid persistent demand concerns due to the coronavirus pandemic. Figures from the EIA report showed stocks of crude oil in the US jumped by 4.351 million barrels in the week ended January 15th, 2021, the first increase in six weeks and compared to market forecasts of a 1.167 million fall. The imposition of fresh lockdowns in Shijiazhuang, the largest city of North China's Hebei Province, clouded the outlook on fuel demand recovery in the world’s second-biggest oil consumer.

WTI crude futures fell more than 1% to below $52.5 a barrel on Friday, after the latest EIA report showed stocks of crude oil in the US rose by 4.351 million barrels in the week ended January 15th, the first increase in six weeks and compared to market forecasts of a 1.167 million fall. On Wednesday, API data had shown US crude inventories unexpectedly rose by 2.562 million barrels last week, the biggest jump in a month and compared to forecasts of a 0.28 million decline. The oil market was already under pressure amid persistent concerns over weakening demand in the light of a worsening pandemic, particularly in China, the world’s biggest oil importer. A new wave of coronavirus infections in China led to lockdowns in the Hebei province and authorities are asking people to stay at home during the Lunar New Year holidays next month.

US crude oil inventories jumped by 4.351 million barrels in the week ended January 15th, 2021, the first increase in six weeks and compared to market forecasts of a 1.167 million fall, according to the EIA Petroleum Status Report. Meantime, gasoline inventories decreased by 0.26 million barrels, while markets had forecast 2.771 million increase.

The Mexican peso depreciated to 19.9 per US dollar, having touched an over one-week low of 20 earlier in the session, after data showed consumer prices in the year through the first half of January rose more than expected. Investors also remained concerned about the ongoing coronavirus crisis and its impact on Mexico's economic recovery. At the same time, Mexico's President Andres Manuel Lopez Obrador said this Friday that he will authorize private companies and local governments to purchase COVID-19 vaccines directly, as the government seeks to speed up vaccinations against the pandemic. In 2020, the Mexican peso depreciated around 5%, suffering its worst year since 2016 due to weak oil prices and lockdowns around the world.

European stocks traded in the red for a second session on Friday, after preliminary PMI data showed business activity across the continent fell for the third month led by worsening conditions in the service sector and a weakening of manufacturing growth. Airline stocks were among the worst performers, after European leaders decided on Thursday to keep their borders open but to dissuade any non-essential travel to curb the spread of the coronavirus disease. Countries in Europe continue to battle record infections, hospitalizations and deaths and continue to impose tighter measures and lockdowns. ECB President Christine Lagarde warned on Thursday about the effects of a surge in infections on the economic outlook.

The Baltic Exchange's main sea freight index snapped a three-day winning streak and fell 1.5% to 1,810 on Friday. The capesize index, which tracks iron ore and coal cargos slumped 3.5% to 2,970. Meanwhile, the panamax index, which measures coal or grain cargos rose 1.2% to a five-month peak of 1,659; and the supramax index edged up 9 points to 1,142, its highest level in nearly 15 months. The Baltic Dry Index rose 3.2% in the third week of January, extending a 9.2% gain in the previous week.

Sales of previously owned houses in the US increased 0.7% from the previous month to 6.76 million units in December of 2020, beating market forecasts of 6.55 million. The median existing-home price was $309,800, up 12.9% yoy. Total housing inventory totaled 1.07 million units, down 16.4% from November and down 23% from one year ago. Unsold inventory sits at an all-time low 1.9-month supply at the current sales pace. Considering full 2020, existing-home sales reached 5.64 million, the highest level since 2006. "This momentum is likely to carry into the new year, with more buyers expected to enter the market. Although mortgage rates are projected to increase, they will continue to hover near record lows at around 3%. Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway", said Lawrence Yun, NAR's chief economist.