June 28, 2021 | by sandeep
5 Market Movers to Look Out for This Week – 28/6/21
By Mateo Jarrin Cuvi
Plenty of market moving action for you and your fellow traders this week. Funny GIFs included!
Is a Price War Imminent?
OPEC will be hosting its 18th Ministerial Meeting on Thursday, July 1st and it will be super interesting to see what’s decided.
Early last week, Russia said it would propose a hike in production to make up for the current supply deficit of close to 3 million barrels per day, a move that would put it at odds with Saudi Arabia.
Remember that over a year ago, Russia and Saudi Arabia engaged in a month-long price war that caused the price of WTI and Brent to drop by 24% in a single day, their worst performance since 1991.
Markets are quite tight at the moment so OPEC+ might ultimately reach an agreement to increase output come August.
Furthermore, India, the world’s third largest oil importer, is urging the black gold cartel to boost production to better control the rising prices, which have led to inflationary pressure in the country and negatively impacted its economic recovery.
In a meeting with OPEC, India’s oil and gas minister Dharmendra Pradhan expressed the country’s “concerns over the increasing crude oil prices and its impact on consumers as well as on smart economic recovery.”
Pradhan also “reiterated his request of phasing out production cuts and…emphasised that crude prices should remain within a reasonable band, which will be in the collective interests of both consumers & producers and will encourage a consumption-led recovery.”
Keep your eyes peeled for these negotiations as the price of oil is bound to move!
It’s NFP Fri-Yay!
May witnessed a 559,000 hike in employment in the US with a 0.3% drop in the unemployment rate when compared to April.
While these numbers were somewhat underwhelming, the US labor market seems to be headed in the right direction.
According to Indeed economic research director Nick Bunker, the country “will need to keep up this tempo for quite some time to get back to a semblance of the pre-pandemic labor market.”
The US is still 7.6 million jobs below the figure seen in February 2020 at the cusp of the COVID-19 pandemic.
Tune in on Friday, July 2nd at 12:30 pm GMT to review the latest NFP data and set up those USD trades as soon as possible!
The Sky’s the Limit for S&P 500
After reaching all-time highs earlier this year, the S&P 500 lost some value in recent weeks, particularly following the Fed’s recent announcement it would raise interest rates earlier than anticipated.
Lo and behold, this downtrend didn’t last too long.
The index of the top 500 companies in the US hit new all-time highs late last week after the Biden administration announced it had reached a bi-partisan agreement on its infrastructure deal.
The proposed deal would include close to $579 billion in new spending that’s expected to improve the country’s roads, bridges, public transportation, electric vehicle infrastructure and broadbands, among others.
Funding for the plan will come from a combination of greater IRS enforcement on wealthy tax avoiders, the reallocation of unused COVID-19 relief money, and the development of private-public partnerships and bonds, to name a few.
Overall, this index has gained close to 15% during the first seven months of 2021.
Will the S&P 500 continue its climb to yet another peak or will its price ultimately consolidate?
Keep track of the S&P 500’s price these coming weeks and jump in when the time is right!
Inflation is the New Black
EU CPI for May closed at 2.3% year-over-year, a 0.3% hike from April.
This marked the first time in three years that EU inflation actually exceeded the European Central Bank’s target of slightly below 2%.
Like with the Fed in the US, the ECB led by Christine Lagarde has said that this inflationary pressure is only temporary in nature, a result of the disruptions inflicted by COVID-19 on the region’s economy.
As reported by the Financial Times, “most economists think a sustained period of above-target inflation is unlikely in the eurozone because millions of people lost their jobs, were put on furlough or left the workforce during the pandemic.”
Despite this sentiment, last week Hungary became the first EU country to increase its interest rate in an effort to quell inflation, pushing it up by 30 basis points to 0.9%. This was the first time in close to ten years that Hungary raised its interest rates.
Will this upward pressure for the EU continue well into June?
Find out on Wednesday, June 30th at 9:00 am GMT as the flash estimate for the EU’s June CPI is released.
Inflation is hip and happening these days, making it a prime indicator to help power your EUR trades!
Introducing the Tankan Manufacturing Index
Here’s a new indicator for you
Japan’s Tankan Manufacturing Index surveys about 1,200 large manufacturers, providing an excellent gauge of general business conditions and the economy’s overall health.
Figures for Q2 2021 are expected to be on the positive side with manufacturers benefiting from a boost to both exports and corporate profits from a global demand recovery.
According to economic analysts, this index “will improve from plus 5 points in March to a median of plus 15 points,” which represents its highest level since more than two years ago.
Additionally, the index for major non-manufacturers will move into the positive for the first time in over a year. Concerns, however, still remain in the services sector with eateries and hotels struggling as a result of the measures imposed to stop COVID-19’s spread.
Taking all of this into consideration, the overall index should remain rather low with a median of plus 3 points.
Confirm these results on Wednesday, June 30th at 11:50 pm GMT and get those JPY trades ready!
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